2014 lsis sustainability report · 2019-11-12 · employee satisfaction evaluate and compensate...

2014 LSIS Sustainability Report

LS Tower, 127, LS-ro, Dongan-gu, Anyang-si, Gyeonggi-Do, 431-848, Korea www.lsis.com

02 2014 LSIS Sustainability Report

About This Report Contents

LSIS aims to use this report as a guide for sustainable growth. Therefore, we

have worked to provide balanced information on our economic, social, and

environmental performances and tried to introduce our various sustainability

activities for the past year in response to stakeholder requirements. We plan

to continue sharing our growth through our annual sustainability report.

Reporting Period

This report covers our sustainability activities and performances from January 1

through December 31, 2014 and in some cases, historical data in 2012, 2013 and

current data in the first half of 2015 have been included.

Scope and Boundary

We aimed to report major status and performances in the aspects of economy (based

on K-IFRS), society and environment of the domestic business sites in principle, but

included overseas business sites when necessary.

Reporting and Assurance Standards

This report was prepared in accordance with categories outlined in the GRI G4

Guidelines. To ensure reliability and enhance quality, the report has undergone

executive team review and received independent 3rd party assurance. The details of

the Independent Assurance Report can be found in the Appendix.

Inquiries on this Report

Please send questions or comments on the LSIS Sustainability Report through the

information below:

LSIS Corporate Planning Department

10F, LS Tower, 127, LS-ro, Dongan-gu, Anyang-si, Gyeonggi-Do, 431-848, Korea

Website www.lsis.com

Telephone +82-2-2034-4432

Fax +82-2-2034-4949

E-mail [email protected]

About This Report 02

2014 Sustainability Management Highlights 04

CEO’s Message 06

COO’s Message 08

Overview

Corporate Profile 12

Global Business 16

Business Portfolio 18

Green Business

Smart Grid 22

Energy Efficiency Enhancement 24

inteGrated sustainaBility manaGement

Sustainability Management System 28

Materiality Test 30

Customer Satisfaction 34

Win-win Growth 40

Employee Satisfaction 46

Environmental and Safety Management 54

Social Contribution 60

Shareholders/Investors Satisfaction 66

Management Innovation 69

Technology Management/Intellectual Property 71

Ethical Management 74

Integrated Risk Management 77

aPPendiX

Sustainability Management Data 79

- Financial 79

- Environmental 80

- Social and Other 81

GRI G4 (Core) Index 84

UN Global Compact COP 87

Independent Assurance Report 88

Credits 90

04 05 2014 LSIS Sustainability Report

2014 sustainability management Highlights

January may June

Ranked top in PLC/Drive sector of KS-QEI for

2 years in a row

LSIS was honored with the number one ranking for

2 years in a row in the programmable logic controller

(PLC) and drive sector, the representative automation

product category, of the KS-QEI (Korean Standard–Qual-

ity Excellence Index).

Unveiled high-voltage circuit breakers

LSIS unveiled its new large-capacity high-voltage circuit

breakers including the Susol VCB (vacuum circuit break-

er) with 7.2kV 50kA 5000A, and the Susol ACB (air circuit

breaker) with 150kA 6300A, which were designed to

ensure the safe operation of power supply lines on Sep-

tember 23 at the Seoul International Electric Fair (SIEF),

held at Exhibition Center 1 of KINTEX (Ilsan, Korea).

Named global top 100 innovative enterprises for 4

years in a row

LSIS was selected as one of the top 100 innovative

enterprises for 4 years in a row by Thomson Reuters, a

leading global consulting group and communication

service provider. The award ceremony was held at the

LS Tower in Anyang on November 26, 2014.

LSIS Vietnam won the CSR Award

LSIS Vietnam subsidiary received the Minister Prize of

the Ministry of Planning and Investment in Vietnam at

the ‘2014 CSR Awards for Korean Enterprises in Vietnam’,

jointly hosted by the Korean Ministry of Trade, Invest-

ment and Energy and Vietnamese Ministry of Planning

and Investment. The contribution and value LSIS provid-

ed as a foreign investor were recognized in categories

such as social contribution activities, participation in

local communities, HR, finance, and environment after

a two-phased quantitative and qualitative evaluation.

september november december

Donation of service vehicles to the disabled CEO Ja-Kyun Koo received Gold Tower Order at 49th Annual Invention Day

Ranked top in PLC/Drive sector of KS-QEI for 2 years in a row LS Vietnam won the CSR Award

Unveiled high-voltage circuit breakers Named global top 100 innovative enterprises for 4 years in a rowWon the world’s largest smart grid project in IraqSelected as great workplace for 3 years in a row

Donation of service vehicles to the disabled

LSIS, together with LS Group, held the ‘Service Vehicle

Delivery to People in Need’ ceremony on January 27

in collaboration with the Community Chest of Korea,

where the company provided vehicles to 7 social wel-

fare facilities, in an effort to improve mobility for the

disabled.

CEO Ja-Kyun Koo received Gold Tower Order at 49th

Annual Invention Day

LSIS CEO Ja-Kyun Koo received the Gold Tower Order of

Industrial Service Merit in recognition of his concerted

efforts to invest in R&D on industrial power and auto-

mation, and to boost the company’s intellectual prop-

erty (IP) competitiveness, thereby helping secure future

growth engines for the country. The Gold Tower Order,

the most prestigious order of the government, had been

conferred on CEO Koo at the 49th Annual Invention Day

ceremony hosted by the Korean Intellectual Property Of-

fice at the aT Center in Yangjae-dong, Seoul.

Won the world’s largest smart grid project in Iraq

LSIS operations in Iraq, launched in 2011, are coming to

fruition. In May 2014, LSIS signed a USD 52.24 million

contract (worth KRW 53.6 billion) to construct advanced

metering infrastructure (AMI) and provide 110,000

smart meters to 19 areas including Baghdad. This project

marked the world’s largest single international project

for AMI.

Named Korea’s Best Corporation for 7 years in a row

In recognition of contributions to securing future

growth engines for the nation with its strong invest-

ment in R&D and global strategy for electric/automa-

tion and green business, LSIS was honored with the title

of Korea’s Best Corporation in the electrics/conductor

sector at the 2014 Korea Best Corporations Awards held

by the Korea CEO Association at the Renaissance Hotel

(Seoul) on June 24. LSIS has been awarded this honor

for 7 years in a row.

Named Korea’s Best Corporation for 7 years in a row

Selected as the great workplace for 3 years in a row

At the ‘2014 Great Workplace Awards’ ceremony held at

the Grand Hilton Hotel in Seoul on March 20, LSIS was

awarded the grand prize for 3 years in a row. This award,

hosted by Hankyung Magazine, recognizes companies

for outstanding accomplishments in creating great work-

place based on excellent corporate culture.

march


CeO’s message

I deeply appreciate our stakeholders’ great interest and support for LSIS.

Since the foundation in 1974, we have grown into a leading company in electricity and energy businesses, contributing

to the development of national economy for the past 40 years. Our core business portfolio comprising of electricity and

automation solutions has been a vital part of the nation’s economic infrastructure. We have also created opportunities

for growth by quickly and proactively adapting to changes in society and business environment.

In particular, our core mindset of ‘Always with our Customers’ and the management philosophy of ‘LSpartnership’ have

allowed us to gain recognition as a company that contributes to national economy and society and become a motto for

pursuing sustainable growth together with all stakeholders.

Moreover, the capabilities and ceaseless efforts of our employees have played a crucial role in our growth. We will

continue to strive to create a corporate culture that enables all our employees to fulfill their roles honestly, fairly, and

faithfully through sustainability management. By doing so, we will be able to gain even more trust from our stakeholders

as well as secure sustainable competitiveness.

With the establishment of a new mission of ‘Futuring Smart Energy’ to prepare for the next 40 years, we are committed

to helping all stakeholders enjoy safe and convenient life through efficient and eco-friendly smart energy.

In addition, we set a new vision of ‘G365’ which implies clear targets to achieve KRW 6 trillion in sales and KRW 500

billion in operating income by 2020 through focusing on 3 key words of ‘Global,’ ‘Green,’ and ‘Great.’ To realize the vision,

we have set the 4 core values of collaboration, execution, creativity and integrity which will be standards for all business

processes and basic guidance for implementing sustainability management.

Our sustainability management activities based on core values will not only contribute to creating an active

communication culture inside and outside the company but allow us to highly satisfy needs and requirements of all

stakeholders.

We aim to grow into a total solution provider in the smart energy business and at the same time, become a company

that pursues win-win growth with diverse stakeholders. To this end, we reestablished the strategic direction for our

businesses and products.

First, we are determined to shift our business focus to solutions from devices in order to strengthen our position

as a solution provider. Second, we will preoccupy smart grid and automation solution markets in advance through

technological convergence. Finally, we will conduct specific strategies by region to expand global markets.

I ask for your continuous support and interest in our steps to take toward change and innovation.

Chairman & CEO Ja-Kyun Koo

‘We will create a sustainable

future by evolving into

a global leader in the

smart energy business.’


‘Sustainability management

is the basic principle for all employees’

decision-making and work

execution at LSIS.’

LSIS introduced sustainability management in 2014. Can you share your plans to improve

sustainability and accompanying expected effect?

Our fundamental goal for sustainability management is to become the most admired company based on stakeholder

trust. To this end, we are focusing on strengthening communication with our six core stakeholder groups comprised

of customers, suppliers, employees, shareholders and investors, and local communities, through which we pursue win-

win growth with them. In addition, we will continue to create environmental value by providing products and services

with high efficiency and low environmental impact. Because this is a basic corporate responsibility and the key to future

market competitiveness. Finally, it is very crucial to comprehensively forecast and manage business risk as well as social

and environmental risks in order to continuously develop businesses and pursue win-win growth with stakeholders in a

time of high uncertainty.

Forecasts indicate that both the domestic and global market environment will be unfavorable in 2015. Therefore, it is

more important than ever that we strengthen our basic activities such as R&D and quality control in addition to raising

our corporate value through sustainability business practices such as pursuing management innovation, organization

culture improvement, compliance and management ethics, and environmental management. This will enable us to lead

the global standard and prevent various risks in order to create the opportunity to make a leap to the next level. These

efforts will, in the end, play a central role in making LSIS a sound and strong company.

The growth of LSIS leads to happiness of stakeholders. What is the message you would like to share

with stakeholders through the first sustainability report?

The most important purpose of the sustainability report is to fulfill our stakeholders’ right to know by sharing not

only our operating results but sustainability performances in an objective and transparent manner and to establish

a two-way communication channel. Moreover, this report will be used as a guide for sustainability management

implementation and published annually to introduce our businesses and corporate value.

I hope many stakeholders will gain a better understanding of LSIS and feel engaged in our business and management

directions through this report. In particular, I should be grateful to stakeholders if they might actively share their

ideas and suggestions so that we can become a more transparent and ethical company that exercises strong social

stewardship and creates environmental value.

Most companies are today facing challenges in business due to tough global economic conditions and tightening

ethical, social, and environmental issues. It is more crucial to understand and communicate with stakeholders in order to

lead the future and successfully respond to these challenges, through which we will not only forecast and manage risks

in advance but expand stakeholder participation and cooperation to build a better society.

All of us at LSIS will work together to sincerely implement sustainability management to strengthen internal stability

and we will present the best practice of sustainable business innovation model in the global smart energy industry to

grow into a respected and trusted company.

COO’s message

President & COO Jai-Hoon Han


Corporate Profile 12

Global Business 16

Business Portfolio 18

OverviewLSIS, Korea’s leading company in the fields of electrical power and automation solutions,

announced ‘Futuring Smart Energy’ as a new mission at the ceremony to declare the

value-focused management principle in 2015. We will continue to lead the future of smart

energy together with our stakeholders by being committed to fulfilling environmental

and social responsibility as well as generating economic value in spite of rapidly changing

business environment.


Corporate Profile

Introduction

Since its founding in 1974, LSIS has become Korea’s leading company in the fields of electrical power and auto-

mation solutions. LSIS was separated from LG Group in 2003 to pursue a second leap and new beginning under

the current corporate name. In 2015, LSIS declared the value-focused management principle and launched a new

mission of ‘Futuring Smart Energy’ and ‘Vision 2020.’ We are working tirelessly to grow into a global company

that can create economic value, protect the environment with an eco-friendly business portfolio including smart

energy, and contribute to humankind.

Economic Value Flow

Profile

Organization Chart

Business

R&D

Support

CEO COO

Business environment in 2014 has been very tough internally and externally due to delayed global economic

recovery, fluctuation in foreign exchange, drop in copper prices, and geographical risks in the Middle East.

Under these challenges, LSIS achieved KRW 2.3 trillion in sales on the consolidated basis, a slight decrease

from the previous year. However, non-consolidated sales recorded KRW 1.8 trillion, a stable growth compared

with the previous year, backed by invigorating electric power and solar power businesses. In 2015, we expect

robust growth in our flagship electric power and automation solutions and remarkable sales increase in new

businesses. In addition, we will concentrate our efforts to achieve the Vision 2020 and become a leader of

green business in the domestic and global markets by pursing the following 4 strategic directions: ‘enhance

the position as an electric power solution provider,’ ‘dominate new markets in advance through conver-

gence,’ ‘expand global markets,’ and ‘secure operational excellence.’

Business Analysis

CEO/ COO Ja-Kyun Koo/

Jai-Hoon Han

Employees

Company Name

LSIS Co., Ltd

LS Tower, 127, LS-ro, Dongan-gu, Anyang-si, Gyeonggi-Do

Headquarters

(Korea Investors Service, Korea Ratings)

AA-

Founded

July 24, 1974

3,655 persons (including temporary staff )

(Unit: KRW in millions)Economic Value Distribution(Non-consolidated basis)

Economic Value Distribution

Employees

Local Community

Suppliers

EnvironmentShareholders and

Creditors

Government

18,758Tax and dues

64,551Dividends and interest

expenses

4,671Environment and safety related

expenses

278,819Wages, welfare benefits, and

retirement benefits

1,324,425Procurement

1,204Social contribution expenses including

donations

Power Distribution Business Group

Power Grid Business Group

A&D (Automation & Drive) Business Group

Convergence Business Group

China Business Group

Plant Support Group

Corporate Planning Group (CSO)

Finance Group (CFO)

Human Resource Management Group (CHO)

R&D Group (CTO)

Economic Value Creation (Unit: KRW in millions)

Consolidated

Non-consolidated

993,461

955,901

Total Equity

Consolidated

Non-consolidated

1,300,895

1,195,183

Total LiabilitiesSales

Consolidated

Non-consolidated

2,293,984

1,827,657

Consolidated

Non-consolidated

157,570

155,115

Operating Income

Consolidated

Non-consolidated

2,294,355

2,151,083

Total Assets

Credit Rating


Vision and Strategy

Corporate History

1974. 07 Established Lucky Packing Co., Ltd.

1987. 03 Changed the name to Goldstar Industrial

Systems Co., Ltd.

1995. 02 Changed the name to LG Industrial Systems

1995. 09 Merged with Goldstar Instrument & Electric Co., Ltd.

and Goldstar Electric Machinery Co., Ltd.

1974~1995

A Passionate Beginning

1999~2007

1999. 04 Merged with LG Metal Co., Ltd.

2000. 09 Completed Power Testing & Technology Institute

2001. 06 Completed a factory in Dalian, China

2003. 11 Separated from LG Group

2005. 03 Changed the name to LSIS Co., Ltd.

2005. 09 Completed a factory to produce electric power &

automation equipment in Wuxi, China

2007. 02 Established LSIS (ME) FZE in Dubai, UAE

Another Transition Towards Success

2008~2010 2011~

2008. 04 Moved headquarters (LS Tower, Anyang, Korea)

2008. 10 Opened Shanghai R&D Center in China

2009. 03 Announced green business

2010. 03 Established LS Sauter

2010. 04 Completed Busan plant

2011. 10 Completed Busan HVDC factory

2012. 05 Completed Cheongju EV Relay factory

2014. 05 40th anniversary

2014. 05 Received Gold Tower Order

2015. 01 Declared value-focused management principle

2015. 03 Completed Anyang R&D Campus

The Fruits of Pursuing Growth and Innovation Leapfrog into a Global Leader

missionvision 2020

Core value

managementPhilosophy

Collaboration Execution Creativity Integrity

Greater value together!

LSIS has grown together with the Korean economy for the past 40 years. Our new mission requires us to consistently innovate and evolve into a leader that contributes to the develop-ment of the world and mankind beyond the domestic market. We will lead the world into the future of smart energy and continue to strive to become a global top-tier company. Value-fo-cused management, reestablished value system, will be the key to achieve these goals.

Boosting Our Market Position as a Power Solutions Provider

Leading New Markets through Convergence and Integration

Expansion of Global Markets

Securing Operational Excellence

strategy

KRW 500 billion in

operating income

KRW 6 trillion in

sales

Opening the Future of Smart Energy

Corporate Profile


Global Business Under the strategic direction to be a global power solution provider, LSIS is concentrating

on local investments and marketing activities in the US, Europe, China, the Middle East,

and Southeast Asia in order to boost global operations.

Anyang(Headquarters)

Cheongju

Busan

Cheonan

Domestic operations

Global Business Strategy

Global Sales Composition (Consolidated) (Unit: KRW in millions)

Overseas export Domestic consumption

% of overseas export

China Asia

North America Europe etc.

201220112010 2013 2014

1,223,356

1,013,088

1,069,767 935,815

1,282,110 1,358,169

1,148,368

847,573686,462

Overseas sales breakdown in 2014

37.4%

40.9%45.4%

45.5%40.8%

16.8%

56.6%

5.3%

10.3%

11.0%

1,219,342

Headquarters

Global Network

Headquarters Anyang

Domestic Operations

Anyang, Cheongju, Cheonan, Busan

Overseas Subsidiaries

Shanghai, Wuxi, Dalian, Hubei (China), Hanoi (Vietnam), Amsterdam

(Netherlands), Dubai (UAE), Tokyo (Japan), Chicago (U.S.A.)

Overseas Branches

Shanghai, Beijing, Guangzhou, Qingdao, Chengdu, Shenyang, Jinan (China),

Ho Chi Minh (Vietnam), Tokyo (Japan), Detroit (U.S.A.), Moscow (Russia)

Global Service Centers

Shanghai, Beijing, Guangzhou, Qingdao, Chengdu, Wuxi, Changzhou,

Xiangtan, Nanjing, Jinan, Chongqing, Foshan, Fujian, Wuhan, Shenyang,

Dalian, Yichang (China)

Global R&D Centers

Shanghai (China)

asia

middle east/africa

america

China

europe/Cis

AsiaWe will solidify our leadership in the power distribution and automation market by expanding authorized agents and utilizing local sales channels.

ChinaWith the idea that China is our 2nd domestic market, we will expand market share by improving our brand power.

Middle East/AfricaWe consider the Middle East and Africa as core markets for power grid EPC business. We will enhance marketing activities for this business and dominate our presence as a global player.

Europe/CISWe will lay the foundation for stable growth and a new leap forward through expanding organization of local subsidiaries.

AmericaWe will make significant progress towards making the Americas our core strategic market by building partnerships with local players.


Power distribution Business

Protect power plants and substations from accidents stemming from overload, grounding, and short circuit of electrical wire

Protect lives and devices by breaking the circuit in a vacuum when abnormal current takes place in medium voltage distribution lines

Transform voltage and currentby using electromagnetic induction devices

Gas Insulated Switchgear (GIS)

Transform voltage and current stably through step-up and step-down of voltage

Power Transformer (TR)

High Voltage Direct Current (HVDC) System

Monitor electric power systems and manage safety control by insulating circuit breakers and supervisory control devices

Vacuum Circuit Breaker (VCB)

Break the current in case of abnormal situations such as overload and short-circuit manual or remote control

Molded Case Circuit Breakers (MCCB)Prevent load by controlling motors

Magnetic Switch (MS)Distribution Transformer (TR)

Protect lives and devices by breaking the circuit when abnormal current takes place in low voltage distribution lines

Air Circuit Breaker (ACB)

Power Plant

Elevators, etc.

Consumers

Business Portfolio

Major performances in 2014• Launched new UL MCCB

• PNL solution obtained approval from Electricity Boards (Taiwan, the Philippines, Pakistan, etc.)

<Major Projects>

- Soekarno Hatta Airport Terminal #3 project in Indonesia

- Electrical facility project of London Underground Limited in the UK (SSR3B)

- Water treatment project in Iraqi Kurdistan

- Won an Bidding for supplying E-type smart meters to KEPCO

Plans for 2015• Strengthen overseas business and project sales activities by establishing new

local branches

• Provide tailored solutions by securing LV/MV PNL solutions and developing new products

• Target specific markets related to renewable energy (solar and wind power and energy storage equipment) and applications

• Research future technologies and next-generation products in advance

• Operate Separate organizations responsible for renovation and enhance pre-inspection activities

Major performances in 2014

• Supplied GIS to Samcheok thermal and Andong combined cycle power plants

• Won a major project to supply substation equipment from Iraq’s Ministry of Energy (MOE)

• Diversified export markets by winning turnkey projects to supply substation equipment to Haiti and Sri Lanka

• Won a contract to supply HVDC converter station equipment to the North Dangjin-Godeok project

Plans for 2015

• Approach turnkey projects, and overseas markets by setting target-tailored strategies

• Enhance HVDC manufacturing and R&D capability

• Improve customer loyalty through providing tailored solutions

• Expand extra-high voltage and large capacity product lineups

• Reinforce competitiveness in the global market by developing market-tailored products

Power Grid Business

Transmit electricity by converting alternating current into direct current

Switchgear

About the Business Group

The Power Grid Business Group promotes convergence solution that combines extra-high

voltage electric power facilities and systems with IT technology. Major products include gas

insulated switchgear (GIS), power transformer and switchgear to transmit, transform and

distribute electricity generated from power plants. We also focus on monitoring & diagnosis

system for electrical equipment and high voltage direct current (HVDC) system. By provid-

ing total solutions for extra-high AC and DC voltage power and conducting EPC turnkey

business encompassing all processes from design to construction, we are proactively enter-

ing global markets including North America, the Middle East, Latin America and Asia.


The Power Distribution Business Group provides solutions necessary for supplying power to

industrial, commercial, and residential facilities, helping people to use electricity safely and

conveniently. These solutions have allowed us to maintain the largest market share in the

domestic power equipment market and to evlove into the leading company in the power

business. Main products are vacuum circuit breakers (VCB) air circuit breakers (ACB), and

Molded Case Circuit Breakers (MCCB) which protect electric power system ranging from

low to medium voltage. We also focus on developing next-generation products including

smart meter and IED (Intelligent Electronic Device) through consistent investment in R&D,

and expanding our business territory to Asia, Middle-East, Europe, North America and so on.

Sales

2012

728.7

in 2014

725.1

730.0

730.02013 2014

(Unit: KRW in billions)

billionKRW

in 2014

KRW 378.3

Sales (Unit: KRW in billions)

2012

327.8

359.7

378.3

2013 2014

billion



• Smart Grid: EES References to electric utility and private company

• EV Solution: Selected as a provider for mild hybrid system (48V) of a global top class automaker

• Photovoltaic System Solution: Advancement of business structure through total package projects

• Public infrastructure: Obtained Korea’s first SIL 4 certification for CBTC on-board and wayside systems

Plans for 2015

• Smart Grid: Diversify overseas power IT markets for sustainable growth

• EV Solution: Develop new overseas markets including Japan to evolve into a global player

• Photovoltaic System Solution: Provide total package solutions that meet customer needs

• Public infrastructure: Establish the foundation for overseas business expansion by improving a short-term winning contract


• Signed a big B/L contract from India

• Secured domestic FA system references

• Won a major contract for combined heat and power plants

• Expand product lineup through launching new products- S100/H100 series (LVD), M1000/1000A (MVD), XGB-U series (PLC)

• Expand the market by preparing tailored responses to customer and market needs

Plans for 2015

• Expand business basis and sales channels of local subsidiaries

• Establish the global SVC infrastructure

• Promote a pilot project for the domestic FA system under the Manufacturing Industry 3.0 strategy

• Boost the Servo and Motion businesses

• Expand new markets by winning contracts for heating facilities

• Research advanced technologies for next-generation products

• Raise brand awareness through proactive PR activities

Allow users to easily check the status of various production equipment through the touch screen and to take necessary measures immediately

HMI

A control device that saves energy consumption by controlling motor through power supply frequency variation

AC Drive

Smart Grid Photovoltaic System SolutionEV Solutions Railway System Solutions

Servo

A device to help users precisely con-trol when manipulating equipment location required by the system and operating specific speed and torque (Servo Motor/Servo Drive)

A universal controller that is programmed to operate machinery in a set sequence and conditions which has a wide range of applications from large-scale automation equipment at factories and plants to car-wash machines, golf ranges and general usages

PLC

Business Portfolio


The A&D Business Group provides a wide range of solutions for factory automation. Major

products include PLC (Programmable Logic Controller), AC Drive (LVD-Low Voltage Drive/

MVD-Medium Voltage Drive), HMI (Human Machine Interface), and Servo. We are also en-

gaging in automation system and E/S (Energy Saving) businesses. Each of our products is

dominant in the domestic market and we are accelerating penetration into overseas markets

by continuously pioneering new markets and securing infrastructure. We aim to become the

best solution provider in the automatic control market by securing global competitiveness in

the equipment business and strengthening the FA (Factory Automation) field.


The Convergence Business Group was newly organized in 2014 in order to manage new busi-

nesses of the company. It has four business divisions: Smart Grid Business Division, EV Solution

Division, Photovoltaic System Solution Division, and Public Business Division. Major products

include various solutions for Smart Grid, powertrain solutions for EVs, Photovoltaic System

Solution ranging from modules to operation and maintenance services, and cutting-edge rail-

way signaling system essential for safe and efficient railway operations. By capitalizing on our

capabilities, we will expand our business portfolio to power generation and O&M (operation

and maintenance) to solidify the leadership in the energy and railway solution business. Global

business will be also accelerated through developing new markets.

Sales

2012

304.5279.9 279.2

279.22013 2014


in 2014

billionKRW

2012 2013 2014

394.0

Sales (Unit: KRW in billions)

239.4

357.3394.0

in 2014

billionKRW

automation & drive Business Convergence Business


EES brand born under the know-how and

technology of LSIS. A solution that allows effi-

cient energy management by storing electric

power in battery and accessing such power

when in need.

The government has announced main im-

plementation policies and technical areas

to promote the deployment of Smart Grids.

LSIS launched the ‘Gridsol’, a total solution

brand for energy optimization.

EnGather

• Integrated EES monitoring and control system

• Operation mode

- Demand load based peak shaving

- Scheduled load leveling

- Independent operation to replace emergency

power generators

• High efficiency (98%) and fast response

• Easy O&M based drive design

• Verified through largest contracts to electric utility and

global firms (KEPCO 16MW, Samsung SDI 4.5MW)

• Optimized placement of PCS based on heat flow analysis

(up to 4 units)

• Install disaster prevention facilities

(heat/smoke detection center)

PMS - Commercial/Industrial EES PCS - 1MW EES 40ft Container

• Safe and efficient

power transformation

• Multiple functionality

• EES integrated management system

• Linked to external systems

• Korea’s leading switchgear

design technology

• Supply of qualified switchgear

PCS

PMS

Switchgear

Main Achievements

Frequency Regulation Others

KEPCO’s 16MW EES project for F/R in Seoansung (2014)

Renewable Energy

500kW/250lWh EES connected with wind power grid in Bigeumdo (2014)

Commercial/Industrial

❶ EnGather EES Station, LSIS R&D Campus (Anyang) (2015)

❷ GridSol FEMS Station, LSIS Cheongju Plant (2015)

❸ Samsung SDI, Cheonan Plant, 2.5MW PCS (2014)

❹ Samsung SDI, Ulsan Plant, 2MW PCS (2014)

➊ ➋

➌ ➍

Major

contracts

• Residential EES test project for SCE (Southern

California Edison) in North America, 4kW/10kWh

class EES (UL certified)

• Smart Grid projects in 2013, supply of EES system

(total 1.03MWh)

- Busan Dongrae Market: 100kW/224kWh

- Busan Industrial Supplies Market 500kW/806kWh

National

projects

• Smart renewable project (Dec. 2009~May 2013)

• EES operation system for electric frequency

regulation and electricity market system

development project (Jun. 2013~May 2016)

Major Performances in Smart Grid Areas Key products

LSIS has been leading the smart power grid business by installing

EMS in Korea’s 3 national control centers (Seoul, Cheonan, and

Naju) and many other projects through advanced technologies.

Key Solutions

• EMS (Energy Management System)

• SCADA/DMS (Supervisory Control And Data Acquisition/

Distribution Management System)

• SAS (Substation Automation System) • Microgrid

• Frequency Regulation EES

Key Solutions• Railway Signalling System • Railway Power T&D System

• Power control/electronic parts for EV

• Recharging system for EV

As Korea’s leading railway system solutions provider,

LSIS participated in the Osong-Gwangju Honam high-speed line

section. We also provide green car solutions such as relay system

for EV, power converter, and charger.

Smart Power Grid Smart Transportation

Honam High Speed Railway (2015)

Honam Train Control SystemKPX EMS in Naju (2014)

DCC SCADA/DMS in Iraq (2012~2015)

Won a KRW 12.5 billion order for BDU from SAIC (2015)Won a KRW 7.5 billion order for EV relay from Renault (2014)

Key Products

Gridsol

Key Solutions

• HEMS/BEMS/FEMS (Energy management system for households,

buildings, and factories)

• AMI (Advanced Metering Infrastructure)

• Smart Meter

• EES (Electrical Energy Storage)

- Mid-/large capacity: Integration of Renewable Energy/

Customer

- Small capacity: Residential

40MW class for Mito New Town Megasolar Park (2015)

500kW class Floating Solar Power Plant in Hapcheon (2011)

Smart Consumer

BEMS at Anyang R&D Campus (2015)

FEMS at Cheongju Plant (2015)

1MW PCS 3kW EES(6.3kWh/9.45kWh/12.6kWh)

We have built Japan’s largest solar power system (Mito). We hold

total solar power solutions including module, PCU, EES, and

monitoring system, and our portfolio expands to floating and

rooftop solar systems.

Key Solutions

• Module (production), PCU (transformation), EES (storage),

monitoring system (power generation & consumption), and

power generation system

Smart Renewable

Expected Impact

Reduce excessive investments in gen-

eration facilities and save electricity

costs of consumers by supplying pow-

er needed for peak hours through EES

Ensure quality and reliability of

the grid with rapid response and

stabilize output when renewable

energies (photovoltaic, wind) are

connected to the grid

Allow stable response to emergency

situations by providing power even

during sudden outages

Green Business

Smart Grid

BDU EV Relay OBC/LDC

We provide households, buildings, and factories with optimized

solutions for using electricity, heat, and gas energy. These solutions

are used in LSIS facilities as well. Also we provide EES solutions

helping efficient energy use through charging and discharging

electricity. We also demonstrate the largest supply performances in

the domestic market including 16MW EES in Seoansung.

Smart Power Grid

Smart Consumer/Place

Smart Electricity Service

Smart Renewable

Smart Transportation


HVDC

High Voltage Direct Current (HVDC) system transforms AC power generated from power plants into DC power and transmits it to the necessary point at which the power is transformed into AC power again and transmitted to consumers. LSIS completed the construction of HVDC-specific factory in Hwajeon Industrial Complex, Bu-san-Jinhae Free Economic Zone in 2011, laying the foundation for conducting all processes ranging from parts warehousing to performance inspection, assembly, test, and commissioning.

AC Drive

AC Drive enables to reduce energy consumption by controlling motor speed through power frequency recon-figuration. As a leader who had first introduced universal AC Drive to the domestic market, LSIS has obtained the largest number of certifications on high-efficiency AC Drive and demonstrates the No. 1 position in the domestic market.

Features and Benefits

Without AC Drive, energy saving is marginal because fans and pumps adjust valves and dampers in response to

changing loads depending on seasons, time, and production volume.

With AC Drive, users are able to save much energy as rpm of electric motor is appropriately controlled in accordance

with changes in load.

R&D Achievements and Performances

• Started joint R&D to localize HVDC technology with

KEPCO, LS Cable & System, Taihan Electric Wire (2009)

• Established HVDC Smart Center in Jeju and designed/

manufactured core equipment (2012)

• Won the Technology Award from the Korea Institute

of Electrical Engineers (localization of core HVDC

components) (2012)

• Won the Power Electronics Product Prize of the Year,

Technology Prize, and Plaque of Appreciation

(HVDC Thyristor valve technology) (2012)

• Test operation of the HVDC Smart Center, testing and

installation of self-developed products (2013)

• Test operation of self-developed products at the HVDC

Smart Center (2014)

• Won an order to supply HVDC transformation equipment

to North Dangjin-Godeok project (May 2014)

Product quality en-hancement

Enables to control the motor at constant speed even with unstable power supply

Energy saving

Save energy by controlling motor speed through frequency reconfiguration

Productivity improvement

Build optimal production lines in accordance with work processes to improve productivity

Easy operation

Allow users to manage the product easily

Protection of external facilities

Minimize external impacts by gradually increasing power (Possible damages to external power sources and equipment when a sudden increase in power use for starting high-capacity motors)

Jeju Pilot HVDC SMART CENTER

The HVDC Test-bed to connect our self-developed equipment

(Thyristor valve, converter transformers, C&P) to the grid.

Energy Efficiency Enhancement

Features and Benefits

Advantage for long distance transmissionAC power facilities require additional equipment to provide reactive power in spite of relatively low initial investment, lead-ing to an increase in cost proportionate to distance. DC power, on the other hand, has higher initial costs as additional substations are needed but cost less in relation to distance transmitted, making it better for long distance transmission. In addition, DC power can be transmitted more than double AC power because AC power only flows on the surface of wires but DC power utilizes the entire wire for transmission. Therefore, DC power is optimal for long distance transmission exceed-ing 450km, underwater or underground transmission exceeding 40km and allows for transmission from mainland to island.

Economic investmentDC voltage is only 70% of the max value of AC voltage, which ensures relatively easy insulation and low transmission line construction costs. As such, HVDC requires a quarter of the transmission towers compared to the same volume of AC power, making it more cost efficient.

Enabling transmission of grid connected with renewable energyHVDC makes it easier for new and renewable energy systems that generate DC power such as photovoltaic and hydrogen fuel cells, along with wind energy, which generates AC power but must be transformed into DC due to frequency variability resulting from fluctuating winds, to connect to the electricity grid.

Comparison of Transmission Towers Required

* HVDC uses ¼ the transmission towers to transmit the same voltage of AC power

765kV AC 500kV DC 800kV DC

* Transmitting 6,400MW of electricity over 2,000KM

800㎸ DC756㎸ AC 500㎸ DC

DC vs AC Transmission Cost

0

1000

2000

3000

Conversion loss cost Transmission line cost Substation cost

(Unit: Million USD)

Core equipment of HVDC system that transforms AC to DC, then back to AC

• Role for supplying transformed AC voltage to the Thyristor valve

• Control and protect the overall transfor-mation systems (converter transformers, Thyristor valve) through the HMI (Human Machine Interface)

Key products

Thyristor Valve Converter Transformer C&P (Control & Protection)

LSIS’s Response to the Changing National Energy Efficiency PoliciesIn 2015, the ‘High Efficiency Drive Support Program’ managed by KEPCO was changed to ‘Energy Efficient Market Business’ The main difference is the transition to a performance based system that adds measurement and verifica-tion process from the previous blanket subsidy system. Prior to the official announcement in January of 2015, LSIS took preliminary measures to prepare for the changes by consulting the implementing agency, KEMCO, on techni-cal aspects, measurement and verification methodologies, and market conditions. We will continue to actively take the lead in national energy efficiency initiatives by expanding deployment of high efficiency drives.

* What is the Energy Efficient Market Business?It is a government-led project that promotes replacing old and inefficient equipment with high efficient equipment such as LED lights and drives. Rewards are given based on the amount of energy consumption reduced (KW).

Key products

CO2 reduction and energy saving from AC Drive installation in compliance with the ‘High Efficiency Drive Support Program’

How many pine trees should we plant to equal the CO2 reductions for the past 5 years?

How many homes can we power with the energy saved for the past 5 years?

790,906

45,880

trees

homes

Green Business

Integrated Sustainability Management

Sustainability Management System 28

Materiality Test 30

Customer Satisfaction 34

Win-win Growth 40

Employee Satisfaction 46

Environmental and Safety Management 54

Social Contribution 60

Shareholders/Investors Satisfaction 66

Management Innovation 69

Technology Management/Intellectual Property 71

Ethical Management 74

Integrated Risk Management 77

Core Stakeholders Main Communication Channel

Visits to customers Satisfaction survey Customer meeting Product exhibitions

Training about products Customer service center

Customers

Benefit sharing meetings Supplier exchange meetingsQuality innovation

meeting for Win-win GrowthPortal site for suppliers

Visits to suppliers

Suppliers

Direct communication with person in charge

Environmental campaignsEnvironment-related

meetingsHomepageEnvironment

Direct communication with person in charge

Community meetings Regional volunteer services Homepage

Surveys

Local communities

NDR (Non-deal roadshow) Visits to the company IR conference Business reports

Homepage

Shareholders/investors

Stakeholders of LSISLSIS has selected effective communication channels based on stakeholder surveys.

We will continue to manage and improve communication channels and strive to build trust

with all stakeholders through active and effective communication.

* LinkerS: LSIS’s representative body for office staff

Employees LinkerS*LSIS Sketch

(company magazine)Communicator

Dialogue with the management

Corporate culture survey Labor-Management Council


sustainability management system

Fundamental Directions of Sustainability Management

The primary goal of our sustainability management is to grow into a respected company based on stakeholder

trust. To achieve this, we set up 3 strategic directions, through which we are striving to satisfy stakeholders. In

addition, the company is committed to listening to the voices of stakeholders through active communication and

reflecting them to management activities. By doing so, we will grow into a trusted corporate citizen and a global

leader in pursuit of sustainable growth.

Sustainability Management Implementation System

LSIS has established a system that allows stakeholder input on sustainability issues to be delivered to top man-

agement and effectively applied to decision-making. The Sustainability Management Council is comprised of

leaders and staff members of core teams in each category. The council gathers stakeholder opinions, develops

strategic plans, and conducts detailed practices. The agenda formed by the council is passed on to the Manage-

ment Committee, comprised of executives, to discuss performance and budgeting. The results of the discussion

and core issues are then passed on to the highest decision-making body, the Board of Directors, so that they may

ascertain and manage LSIS sustainability performances.

Sustainability Management Council

The Sustainability Management Council is a company-wide consultative group that presents agendas related to

the overall sustainability issues LSIS faces. The meetings are scheduled to be held every other month, headed by

the CSO. The Management Planning Office is responsible for identifying meeting agendas, and logistical aspects

of managing and operating the council. Participating departments jointly develop sustainability management

plans, share performances, and form collaboration systems in accordance with the company’s sustainability man-

agement implementation direction. In 2014, we created a task force comprised of the departments participating

in the council in order to help the Sustainability Management Council take root. We also conducted 3 workshops,

resulting in better understanding of sustainability management along with the identification of improvement

tasks for 2015.

Major Sustainability Management Activities in 2014

Roadmap for Sustainability Management

LSIS established a roadmap to achieve the mid to long-term goal for the expansion of sustainability management

to overseas operations. We also set up core annual tasks on the basis of our integrated sustainability manage-

ment principle and 3 strategic directions of ‘stakeholder engagement,’ ‘green company image,’ and ‘integrated

risk management.’ These tasks will be systematically managed in accordance with the roadmap.

Goal of Sustainability Management

3 Strategic Directions

Core Stakeholders Customers

Action Plans by Each Stakeholder

Create customer value through

product responsibility and proactive

communication

Pursue Win-win Growth based on

a culture of fair trade

Promote environ-mental management

meeting global standards

Cultivate global talents and improve

quality of life

Increase shareholder value through management integrity and

transparent disclosure

Co-exist with local communities by voluntary social

contribution

Suppliers Environment EmployeesShareholders &

investorsLocal

communities

Grow into a respected company based on stakeholder trust

Stakeholder Engagement Green Company Image Integrated Risk Management

Communication

‘Consensus building on

sustainability management’

(2015)

‘Enhance power of

execution of sustainability management’

(2016)

‘Spread sustainability management

to global operations’

(2017)

Stakeholder engagement

• Select responsible and related depart-

ments for each stakeholder group and

set roles and responsibilities

• Develop a process for incorporating

stakeholder feedbacks

• Expand the scope of stakeholders

globally and strengthen roles and

responsibilities of each department

Green company image

• Strengthen disclosure of

environmental data

• Systemize environmental monitoring

across the value chain

• Reinforce global environmental

marketing

Sustainability management TFT workshop



Report to the Management Committee

Report to Management Committee

Established directions for sustainability management

(Sep.)


Management Planning Office1) Agenda identification 2) Planning

3) Run and record meetings 4) Coordination

Participating departments1) Develop and share plans

2) Build a structure of cooperation

3) Performance sharing 4) Capacity building

Customers <Business Group Marketing Team/

Quality Management Team>

Local communities

<Public Relations Team>

Suppliers <Win-win Growth Team>Shareholders/investors <Treasury Team/

Corporate Planning Dept.>

Employees <HR Team/HR & Relations

Management Team/Innovation & Culture Part>

Ethical management

<Audit Department>

EHS <Environment & Safety Team/

Technology Strategy Dept.>

Integrated risk management

<ERM Team>

Control of integrated sustainability management (Corporate Planning Dept.)

Management Committee

Sustainability

management

• Decision-making

• Budgeting


• Enhance integrated risk

management system

• Establish a monitoring process for

preventing key risks

• Build a system to check and manage

risks of overseas sites

Board of Directors

CEO

COO


Integrated sustainability management

• Evaluate sustainability performance

• Strengthen function-specific execution

strategies

• Solidify sustainability infrastructure for

overseas operations

• Expand global initiative activities

• Internal training on sustainability

management

• Operate Sustainability Management

Council

Built sustainability management imple-

mentation system (assigned R&R)

(Oct.)

Conducted materiality test

(Jul.~Aug.)

Developed mid-term operation

roadmap and improvement tasks

for each department(Nov.~Dec.)


Overview of Materiality Test

We strive to identify and improve our weaknesses, and actively gather and incorporate stakeholder opinions in

our strategic direction for sustainable growth. The first step in this process is the materiality test we run in order to

identify and manage issues related to sustainability management. Our materiality test is comprised of the identi-

fication of sustainability issues, prioritization of issues, and development of operational directions. Sustainability

issues were identified through the 6-step process and identified issues were prioritized according to stakeholder

concerns and business impacts. And then, we suggested strategic directions of sustainability management based

on the prioritization and determined operational directions for 2014 to 2015.

Materiality Test Process

We conducted stakeholder survey on our sustainability man-

agement. The survey was to ascertain interest in our sustain-

ability issues, communication channels regarded as useful, and

activities that stakeholder groups thought needed improve-

ment. A total of 924 employees and 146 external stakeholders

took part in the survey.

Period: June-July 2014

Method: On/offline questionnaire

Participants: 64 customers, 28 suppliers, 924 employees, 16

local communities, 35 persons in charge of

environment, and 3 shareholders & investors

Period: July 2014

Method: One-on-one in-depth interview

Participants: 10 Management Committee members including

heads of business groups

In order to identify key issues taking into consideration sus-

tainability management directions and business, we conduct-

ed in-depth interviews with the management. The interview

focused on material issues that needed to be prioritized, po-

tential non-financial risks, sustainable business trends, meth-

ods to form internal consensus, and other business related

topics.

Identification of Key Sustainability Management Issues

Identification of sustainability issues

(6-step process)

Development of operational directions

(Steering wheel)

Prioritization of issues

(Sustainability management matrix)

step1

Stakeholder survey

step2

Interview with the management

step3

Media and internet research

step5

Global level CSR diagnosis and

assessment

step6

Analysis on issues of advanced companies

and competitors

Period: August 2014

Method: Media research

Subjects: Broadcasting companies, major daily newspapers

and economy newspapers

We analyzed the media exposure for each sustainability is-

sue along with critical articles covering LSIS. The past 2 years

of sustainability coverage in major broadcasting companies,

newspapers, and economy newspapers was analyzed to deci-

pher changes in stakeholder interests. Negative articles were

classified as risks and translated into improvement tasks.

Period: August 2014

Method: Advisory Dialogue

Subject: 6 experts in sustainability management

We held a forum with experts in each sector to obtain special-

ized information on sustainability issues and future trends. The

forum dealt with improvement directions of each sustainabil-

ity issue in accordance with social expectations. In addition,

ideas on publishing sustainability report were gathered and

reflected in this report.

Period: June-August 2014

Method: Assessment by an external institute

Subject: Heads and working-level staff of

departments related to sustainability management

An external expert institute was employed to assess our

current status of sustainability and improve insufficiencies.

Assessment items were based on international standards, rel-

evant laws, and the SRI Investment Guide and all fields related

to sustainability management were evaluated to accurately

identify strengths and weaknesses. Issues identified as weak-

nesses were treated as potential risks and chosen as priority

areas for improvement.

Period: June-July 2014

Method: Research and benchmarking

Subject: 6 domestic and foreign advanced companies and

competitors

We analyzed the level of sustainability management of global

leading companies in the industry and competitors to identify

and manage issues which are relatively weak. In addition, best

practices identified during the analysis were chosen as bench-

marks and shared with relevant business units.

CSR Advisory Dialogue

Experts’ comments on publishing sustainability report and our responses

➊ ‘Both negative and positive aspects of business should be reported in a balanced manner.’

➋ ‘Annual sustainability data should be supplied in order to track changes and progress.’

➌ ‘Long-term sustainability goals should be set and continuous progress displayed.’

➍ ‘The sustainability report should address customer and investor needs for non-financial information.’

➎ ‘Approaches in solving social issues through product sales should be presented.’

➏ ‘You need to have systematic response and reporting processes meeting require ments of each stakeholder group.’

➊ Negative issues were disclosed along with our efforts and plans for improvement.

➋ Three or more years of managed economic, social and environmental data were reported.

➌ We established sustainability management execution system and presented basic and strategic sustainability management directions.

➍ International sustainability standards, SRI investment guides, and client requests were transformed into data for management and disclosed in this report.

➎ We reported our green business to solve social issues on the special feature section.

➏ Our sustainability performances were reported in 6 categories in accordance with classified stakeholder groups.

▶ Comment ▶ Response

materiality test

step4

CSR Advisory Dialogue

➊ ➋ ➌ ➍ ➎ ➏ ➐ ➑

Participants (from left to right)

➊ Tae-Jung Shin (Director, Corporation For All) ➋ Sang-Kyu Hwang (CEO, SR Korea)➌ Han-Kyun Rho (Associate Professor, Kookmin University)➍ Min-Goo Choi (CSO, LSIS)➎ Eun-Kyung Lee (Team leader, Global Compact Network Korea)➏ Choon-Seung Yang (Director, Korea Sustainability Investing Forum)➐ Sang-Young Jeon (Senior manager, Samsung Electro-mechanics)➑ Hwan Jeong (Head of Corporate Planning Dept., LSIS)


Prioritization of Key Sustainability Issues Sustainability Management Operational Trajectory

2014 LSIS Sustainability Management Steering Wheel

Stakeholder interests

Busi

ness

Impa

ct

Customers

01 Strengthen customer-tailored services

02 Enhance complaints handling

processes

03 Establish a fair trade culture (customers)

04 Activate communications with customers

05 Upgrade product quality and responsibility

Suppliers

06 Expand ACE CLUB activities

07 Vitalize communication channels

08 Manage overseas supply chain

09 Disseminate sustainability manage-ment to suppliers

10 Improve effectiveness of win-win

growth programs

11 Establish a fair trade culture (suppliers)

Employees

12 Expand employee communication

13 Evaluate and compensate fairly

14 Attract and nurture talents

15 Strengthen company-wide human

rights and labor policies

16 Pursue work-life balance

Environment

17 Reduce energy use and

GHG emissions

18 Manage hazardous materials and

pollutants

19 Advance environmental management

20 Secure health and safety

21 Manage environmental products

Local communities

22 Participate in volunteer services and

local communities

23 Promote social contribution activities

at overseas sites

24 Build a system for social contribu-

tion activities

25 Strengthen communication with local

communities

26 Develop flagship social contribution

programs

Shareholders/investors

27 Advance corporate governance

28 Increase corporate value through

sustainability management

29 Strengthen corporate information

disclosure

General management

30 Comply with ethics and regulations

31 Integrated risk management

01

02

03

04

05

06

07

08

09

10

11

12 13

1415

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

LSIS response to key issues

Customers 35page

xxpageLocal communities 61page

Environment 22, 55pageSuppliers 41page Employees 47page

Shareholders/ investors 67page

G

ener

al m

anag

emen

t

In

tegrated sustainability management Customer satisfaction management

Win-w

in growth w

ith su

pp

lierss

1

. Inte

grat

ed ri

sk m

anag

emen

t

1

. Operatio

n of the Sustainability Management Council 1. Upgrade of product quality and responsibility

1. Establishment of a fair trade culture (suppliers)

2

. Eth

ics a

nd co

mpl

ianc

e m

anag

emen

t

2. Diss

emination of sustainability management culture 2. Establishment of a fair trade culture (customers) 2. Dissem

ination of sustainability managem

ent to suppliers

3

. Publication of sustainability report 3. Expansion of customer communication

3. Enhancement of effective w

in-win grow

th programs

4. Enhancement of complaints handling processes

4. Expand ACE CLUB activities

5. Reinforcement of customer-tailored services 5. Activate com

munication channels

6. Overseas supply chain managem

ent

Shareholder & investor satisfaction

Contribution to local communities Environmental & safety management

Em

ploy

ee sa

tisfa

ctio

n

Customers

Suppliers

Employees

Environ,entLocal

communities

Shareholder/investor

General management

Integrated sustainability management

Core value

1. Enhancement of corporate inform

ation disclosure

1. Flagship social contribution programs 1. Environmental product management

1.

Wor

k-lif

e ba

lanc

e

2. Advancement of corporate governance

2. Establishment of social contribution system 2. Advancement of environmental management

2. R

ecru

itmen

t and

culti

vatio

n of

tale

nts

3. Increase of corporate value through sustainability 3. Enhancement of communication with local communities 3. Health and safety at sites

3. Enhan

cem

ent o

f com

pany

-wid

e hum

an ri

ghts

and

labo

r pol

icies

4. Volunteer services and participation in local communities 4. Energy saving and GHG emissions reduction

4. Exp

ansio

n of

empl

oyee

com

mun

icat

ion

5. Social contribution activities at overseas sites 5. Hazardous materials and pollutants management

5. Fa

ir ev

alua

tion

and

com

pens

atio

n

Collaboration Execution

Creativity Integrity

materiality test

Upgrade product quality and responsibility

LSIS believes that quality is the key to lead us to

a global company. We will strive to improve the

quality of our corporate management as well

as product quality and accountability.

Develop flagship social contribution

programs

In collaboration with our holding company,

LSIS is implementing flagship social contribu-

tion programs at home and abroad. We are

planning to create an even greater synergy

by developing unique programs linked to our

business expertise.

Establish a fair trade culture

Fair trade with suppliers is the first step toward

win-win growth at LSIS. We sign subcontract-

ing and win-win growth agreements annually

with suppliers and frequently check the status

of fair trade for better practices.

Improve corporate disclosure

We are meeting requirements of all stakehold-

ers including shareholders and investors by

transparently disclosing corporate governance

and economic, social and environmental data.

Pursue work-life balance

At LSIS, we are creating an enjoyable corporate

culture by pursuing work-life balance. We hold

events for employees’ families and operate

‘Family Day,’ and concentrated vacation pro-

gram called ‘Rest(休) Weeks’ to ensure work-life

balance.


LSIS has been improving company-wide risk

management system to efficiently respond

to unforeseen risk factors. We will continue to

systematically manage risks related to external

environment, operations, finance, regulations,

strategies, reputation and so on.

Manage environmental products

LSIS contributes to improving our environ-

ment through environmental products and

green business. We will solidify our image as

a eco-friendly company by continuously up-

grading our environmental product manage-

ment system.

General management 77page


Customer Satisfaction

01

Korean Standard-Quality Excellence Index Internal Quality Management Evaluation Score

807.4points 72points2013

773.9points

2013

70points

2014 2014

2014 Materiality Test Results

Management Issues 2014 Material Issues

Roadmap for mid-term tasks (2015~2017)

With the establishment of an integrated customer satisfaction management system, we

will strengthen activities to prevent complaints and act rapidly to resolve issues. More-

over, we will further customer satisfaction activities by building a real-time customer

satisfaction system that will allow client feedback to be incorporated into management

and provide customized service.

‘Establish an integrated customer

satisfaction management

system’

2015

‘Establish a real-time customer


system’

2016

‘Operate a customer-tailored


system’

2017

Activate communications with customers

Establish a fair trade culture (customers)

Enhance complaints handling process


Strengthen customer-tailored services


Establish a fair trade culture

Activate communications with customers

Power Testing & Technology Center

Management Issue Performances in 2014 Plans for 2015 Department

Upgrade product

quality and responsibility

• Strengthened operation of internal quality evaluation system

• Conducted activities to secure quality in advance

• Strengthen talent development system for quality management

• Expand evaluation on environmental and safety impact of products

QM Team

Establish a fair

trade culture

• Conducted trainings on fair trade for all employees (online training, unit-specific training)

• Self-evaluation on fair trade and self-correction for sales, planning, and marketing staff

• Expand fair trade training and monitoring

• Diversify reporting channels for fair trade issues

Legal Affairs Dept.

• Improved customer data protection system and increased regular inspections • Implement education on personal data protection (twice in a year) IT Innovation Team

Activate communications

with customers

• Carried out customer satisfaction survey for all business divisions • Expand survey on satisfaction (overseas customers) Marketing Team

• PR activities (exhibitions, roadshows, etc.) • Expand PR activity channels

• Responded to customer requirements • Respond to customer requirements on non-financial data

• Distribute sustainability report to major customers

Corporate

Planning Dept.

Enhance complaints

handling processes

• Strengthened preventative measures

• Improved execution rate for Voice of Customers (VOC)

• Prevention: Standardize Q-Post tour improvement activities

• Post-counteraction: Standardize claim response process

QS Team

Strengthen customer-

tailored services

• Held regional training on product in Korea • Enhance training on products for overseas customers Marketing Team

Creating customer value through product responsibility and proactive communication

Quality Management Evaluation Score

7072

(Unit: points)

2012

65

2013 20142011

61

72points

in 2014

Core Process

Marketing Sales Design/Development

Manufactur-ing & Delivery

Installation & Service

Procurement

Support Process

Finance/Accounting IT HR/Labor General & Legal Affairs Environment & Safety Quality Assurance Calibration/Test

Management Process

Business Management Managerial Improvement

(LSIS Drive)

Upgrade Product Quality and Responsibility

Quality Management System

Our Quality Management System (QMS) has been estab-

lished on the basis of requirements of ISO9001 (1993~),

ISO14001 (1996~), K-OHSMS (2008~), TS16949 (2010~),

regulations, customers, and markets as well as process im-

provements identified from management activities. It also

encompasses all processes ranging from planning and de-

velopment of products and service to relevant infrastruc-

ture such as IT system, business operation, and support

activities. By harnessing the Quality Management System,

we are committed to creating the best value.

Management System Process Map

Internal Quality Management Assessment

LSIS has been operating the Quality Management Assess-

ment System to upgrade the quality of management ac-

tivities as part of process quality improvement since 2010.

Our Quality Management Assessment System was devel-

oped based on the Malcolm Baldrige model, a renowned

global management system. It has been contributing to

upgrading the level of our management process and

quality.

Customer-oriented Quality Innovation Activities

Securing high quality on the basis of reliability is very im-

portant in our businesses. As our business area is expand-

ing to smart grid and photovoltaic power solution sectors,

the importance of product and service quality is growing

bigger. In particular, ensuring product quality before the

delivery is critical to our sustainable growth. Therefore, we

are working to ensure quality in advance throughout the

value chain of R&D, procurement, manufacturing, market-

ing, sales, installation, and after-sales service.

Activities to Ensure Quality in Advance

The LSIS PT&T (Power Testing & Technology) Center, es-

tablished in 2000, was the first private institute in Korea to

be equipped with 2,000 MVA capacity short circuit, high

voltage, and reliability test equipment and is focused on

developing technology to improve product performance

and strengthen reliability. By operating PT&T, we were

able to reduce testing time by 30% and save approxi-

mately KRW 4.5 billion.

annually in testing costs. Above all, PT&T allows us to con-

trol testing schedules, making it possible to run preven-

tive tests which have resulted in early-on improvements

in quality and reliability .

Product Safety Standard Certification

LSIS has developed a manufacturing process with strin-

gent reliability and safety standards in order to ensure

safety during product utilization. In addition to the do-

mestic KS standard, we have obtained various domestic

and international standards certification including IEC,

ANSI/IEEE, NEMA, ES, CE, and UL in order to provide cus-

tomers with reliable products.

Cultivating Quality Management Talent

In order to secure the infrastructure for quality manage-

ment, we are working to cultivate quality management

talent. At LSIS, we are developing quality specialists based

on the Quality Management Talent Development Road-

map and these specialists are spearheading efforts to im-

prove quality at our business sites.


Information Protection Management SystemInformation Protection Management Process

Information

Protection

Officer

• Manage all personal information protection operations• Approve personal information protection regulations• Approve personal information protection plans and support executions

• Designate information protection managers and staff

Information

Protection

Manager

• Assume the responsibility for information security

• Set up and execute personal information protection plans

• Manage personal information protection

Information

Protection

Staff

• Operate personal information works

• Implement personal information protection measures

• Manage and supervise the compliance of staff with relevant regulations

IT Security

Staff

• Apply technical protection measures to personal information processing

system and control changes

• Operate personal information works

• Implement of personal information protection measures

• Manage and supervise the compliance of staff with

relevant regulations

Employees’ personal

information

Departments

Utilizing

Personal

Information

• Manage personal information of applicants/recruits/

resigned people

• Manage and supervise companies that we trusted

employee information

Employees’ personal

information

• Manage personal information of membership

• Control personal information related to after service

and technological enquiries

Customers’ personal

information

• Manage personal information of customers and vendors

• Handle personal information of trustee companiesSuppliers’ personal

information

Collection Storage/Use Provision Disposal

• Collect minimum information for only business purpose

• Notify and gain consent when collecting personal information

• Additionally notify and gain consent when collecting identifiable and sensitive information

• Use only for original

purpose at time of

collection

• Adopt technological

safeguards when using

or storing personal

information

• Notify and obtain consent if

information is passed on to

a third party

• Prohibit provision that goes

beyond the scope of consent

• Prohibit use beyond original

purpose of provision

• Dispose personal information

when storage period has

been exceeded, purpose has

been met or has become

unnecessary

• Ensure that information

cannot be restored or

retrieved

Evaluate

Direct Monitor

• Evaluation of personal information

protection activities

• Evaluation of activity performance

• Evaluation of measures to protect

personal information

• Direction on allocation of resources, roles, responsibilities and authority

• Direction on operations and controls Operation

results

Security assessment

Activate Communications with Customers

Customer Satisfaction Survey

The company conducts regular annual customer satis-

faction surveys. On and offline surveys are conducted on

major customers and the A&D Business Group works with

a specialized third-party to increase reliability of survey

results. We ranked top in the PLC/Drive sector in KS-QEI

for 2 consecutive years in recognition of diverse activities

to upgrade product and service quality. In 2015, we will

expand the survey to overseas customers in order to acti-

vate communication and further satisfy customers.

Strengthen PR Activities

LSIS is promoting its products and technologies through

diverse PR activities. In 2014, we participated in the larg-

est electrics and automation exhibitions inside and out-

side Korea such as Automation World (Seoul), Hannover

Messe (Germany), IEEE (U.S.), CIGRE (France), SIEF (Korea),

SPS/IPC/Drives (Germany), PV EXPO (Japan), and CEPSI

(Korea) to showcase our products which reflect global

trends. Moreover, we held roadshows in Southeast Asian

countries like Vietnam and Indonesia to accelerate our

overseas expansion through communications with cus-

tomers. We will continue to create value for our customers

through exhibitions, roadshows, web-letters and adver-

tisement.

Respond to Customer Requirements

LSIS is listening to customers’ voices through various

channels. We adopt both current demands and poten-

tial complaints to our product development process. The

voices of customers are analyzed and treated according

to business division, type, processing status, and input

channel on a monthly basis. Results are sent to related

departments for prompt actions. The opinions gathered

by the customer service center and business divisions are

shared through company and division-wide meetings for

a structured response.

Secure Potential Customers

In order to secure potential customers, LSIS conducts one-

on-one export consultations, business meetings, seminars

through roadshows, and conventions and is managing re-

lated information in customer database. The database of

existing and potential customers is shared with sales-re-

lated departments to boost sales and marketing activi-

ties. In addition, as part of our strategic social contribution

activities, we are sponsoring educational institutions and

technical competitions with our core products, which

helps potential customers further become familiar with

our company and products.

KS-QEI - LSIS’ Drive (Unit: points)

807.4773.9

in 2013 in 2014

Customer satisfaction

Establish a Fair Trade Culture

Prevent Unfair Trade

LSIS has proclaimed compliance and is implementing

diverse fair trade practices based on top management’s

strong dedication towards fair trade.

In order to establish a fair trade culture, we have been

continuously implementing company-wide training for

all employees and conducting regular inspections on

relative departments. The online fair trade compliance

training mandatory for all employees builds the foun-

dation for fair trade culture and specialized trainings for

each department helps to strengthen our commitment to

fair trade. In 2014, we experienced the significant nega-

tive impact caused by collusion and became aware of the

magnitude of damage resulting from having unfair trade

practices brought to light. This acted as an important

turning point and catalyst to eliminate unfair trade prac-

tices and promote fair trade throughout the company.

LSIS has distributed a self-evaluation checklist to staff in

sales, planning, and marketing departments to prevent

unfair trade, providing them with opportunities to assess

and correct their actions. When questions arise, they can

consult the firm’s fair trade specialists. This process is in

itself a form of fair trade training and helps promote com-

mitment to fair trade. The self-assessment and correction

activities have proved effective in spreading a culture of

compliance and preventing violations.

Protect Customer Information

LSIS strictly upholds laws pertaining to the protection

of personal information and thoroughly safeguards

the customer information we collect. In response to the

broader application of personal information protection,

we are managing and protecting all personal informa-

tion on customers, recruitment, employees, and suppliers

in accordance with our personal information protection

bylaws. We conduct annual inspection on personal infor-

mation in the fields of governance, life cycle and IT and

identify improvement tasks for upgrading processes and

systems. Other activities establishing internal manage-

ment processes, gaining consents when collecting per-

sonal information, disposing personal information, and

managing system passwords. In particular, we adopted

DB encryption and DB access control solutions in the first

half of 2014 to proactively prevent information leakage.

We plan to expand the scope of regular inspections to

personal information stored in our DB system and indi-

vidual PCs.

• Monitoring of performances• Monitoring of operations and

maintenance • Internal controls and

self-evaluation

Hannover Messe 2014

Customers

Voice of Customers (VOC)

Channel

Online

Phone/Fax

Web

E-mail

Offline

Visits

Surveys/Interviews

Trainings/Seminars

Response Structure

Sales Production

R&DDesign

Marketing

Service

vOC

Customer Service Center

Business Divisions

Meeting Bodies

Product Development

Col

lecti

on Analysis

Sharing

Category 2012 2013 2014

Abuse of market

position

No. of corrections - - -

Penalties (KRW in billions) - - -

Unfair

collusive practice

No. of corrections - - 2

Penalties (KRW in billions) - - 4.12

Unfair trade

practice

No. of corrections - - -

Penalties (KRW in billions) - - -

Corrective Measures for Unfair Trade Practices


Enhance Complaints Handling Processes

Preventative Activities

We have implemented the Q-Post Tour program to re-

spond to customers’ potential complaints since 2012. This

program allows us to ascertain their quality expectations

and potential complaints in advance and improve the

quality of major products and sales activities. Customer

needs identified through the Q-Post Tour program are

applied to new product design and quality improvement

of existing products, and the results are delivered to cus-

tomers. We are striving to improve the continuity and effi-

ciency of this program by building an integrated process

through collaboration across sales and service depart-

ments and factories.

Manage Customer Complaints

LSIS records and manages customer complaints system-

atically based on our Complaint Response Protocol and

processes. Claims regarding quality are treated according

to severity through the Quality Information System (QIS)

and claims collected by the customer service center and

local offices are managed with a target processing time

of 2 days (48 hours). Major claims are recorded in the

ERP through Client Claim Reports and the Quality Man-

agement Department submits and shares the Improve-

ment Report containing causes, improvement plans, and

management solutions to the Quality Committee every

month. Claims are distributed to responsible departments

and results of implementation are managed as ‘VOC Im-

provement Rate.’ The VOC Improvement Rate was 86.2%

in 2014 and has shown continuous annual improvement.

Claims received from overseas customers are dealt with

equally to domestic claims based on the Overseas Service

Protocol and customer complaints response process. We

will continue our efforts to minimize complaints by ac-

tively managing customer claims and providing guidance

to production lines and suppliers.

Strengthen Customer-tailored Services

Tailored Product Training and Seminars

LSIS provides systematic trainings to both domestic and

overseas customers. We conduct production facility tours

for existing and potential domestic and overseas custom-

ers and hold seminars to offer information on our prod-

ucts. Moreover, we are increasing customer convenience

by visiting them located in remote areas who may have

difficulties in visiting our business sites and training ven-

ues. In the future, we plan to expand the number of train-

ings and seminars to provide tailored training services

meeting customer needs.

Design Management Activities

With the declaration of design management for the first

time in the industry, LSIS established the Design Center

in 2005. The pursuit of customer-centric design was an in-

novative approach in the industrial equipment business

with traditional producer-centric nature. The Design Cen-

ter is being operated as a specialized organization under

the CTO to rapidly respond to customer needs for special-

ization and sophistication. The Design Center enhances

our design competitiveness and corporate image by in-

troducing customer-focused designs that can highlight

our technical expertise, upgrading design quality, and for-

tifying R&D capability. Moreover, we strive for sustainable

design management to harness customer sensitivity and

user experience. Going beyond product development, the

Design Center is helping LSIS become more creative and

safe by designing the R&D Campus, which will be built in

2015, into a truly smart green building that integrates our

products, solutions, and services. We will continue to pro-

vide customers with differentiated value through quality

that touches them and eco-friendly design development.

LSIS Switchgear and H100 Drive were selected as ‘2014 Good Design’ products. The Good Design evaluation held

annually by the Ministry of Trade Industry and Energy demonstrates the highest authority in Korea, and this year’s

evaluations were conducted with stringent site visits by judges. Our Switchgear and H100 Drive were highly recog-

nized for collaborative efforts between business, development and design divisions to improve design quality in the

B2B market, global competitiveness by a design that separates it from competitors, and the establishment of unique

product identity.

2014 GOOD DESIGN Product Certification

The H100 Series (5.5~90kW) adopts an easy to use HVAC-specific keypad, offer-

ing a standardized user interface (UX) to all users. In addition, we have obtained

various certifications (UL, CE, UL Plenum) to secure global competitiveness and

enhanced user-friendliness by adopting Smart Copier technology.

H100 Drive Series

Product and Solutions Seminar, Indonesia

Product and Solutions Seminar, K-Water

Customer satisfaction

It was customary for switchgears to have un-uniform shapes and colors and customer needs for this product were also

diverse and complicated, leading to a wide range of designs. In order to address these issues, we established a design

PI, providing a design standard to revolutionize design quality and improve competitiveness.

Switchgear

Feedback

Planning

Follow-up

Q-Post Tour

Identification of Improvements

Customer Contact

Execution of Countermeasures

VOC Improvement Rate

2012

71.9

86.086.2

2013 2014

(Unit: %)

86.2%

in 2014


Win-win Growth

Win-win Growth Through a Culture of Fair Trade

02

Number of ACE CLUB Members Productivity Support Funding




We will uphold our global corporate stewardship by pursuing win-win growth with all

suppliers both in and out of Korea based on fair trade and communication. In addition,

we plan to share our culture of sustainability management in order to strengthen the

sustainability of our partners.

‘Establish a culture of

win-win growth’

2015

‘Strengthen supplier

sustainability’

2016

‘Develop global win-win growth

programs’

2017

Establish a fair trade culture (suppliers) Vitalize communication channels

Expand ACE CLUB activitiesImprove effectiveness of

win-win growth programs

Manage overseas supply chainDisseminate sustainability management to suppliers

Establish a fair trade culture (suppliers)

Disseminate sustainability management to suppliers

Improve effectiveness of win-win growth programs


Establish a culture of fair trade • Implemented surveys on ethical management • Continue to implement surveys on ethical management (on going) Audit Department

/Legal Affairs Department• Conducted employee trainings on subcontracting • Launch courses to train fair trade and ethical management

Disseminate sustainability

management to suppliers

• Developed strategy to disseminate sustainability management • Implement special training on sustainability management

for suppliers

Corporate Planning

Department/

Win-win Growth Team

Improve effectiveness of

win-win growth programs

• Strengthened infrastructure for win-win growth

• Increased issue amount for Mutual Growth Payment System

• Expand infrastructure for win-win growth to 2nd-tier suppliers

• Increase use of Mutual Growth Payment System

Win-win Growth Team

• Provided financial and training support for suppliers • Expand trainings and financial supports for 2nd-tier suppliers

• Implemented Technology Sharing Program • Activate Technology Sharing Program: supports for improving R&D

capacity based on transferred technology

Expand ACE CLUB activities • Expanded ACE CLUB • Strengthen ACE CLUB support programs

Vitalize communication channels • Implemented Benefit Sharing with 1st-tier suppliers • Implement Benefit Sharing with 1st and 2nd-tier suppliers

Establish a Culture of Fair Trade

Policies and Activities to Comply with

Subcontracting Law

The Legal Affairs Department supports the ethical oper-

ations of departments directly related to subcontracting

and carries out various activities to ensure that compliant

practices are in place throughout the company. First, the

Department swiftly informs relevant departments of gov-

ernment policy announcements so that they may execute

compliance. It also analyzes new laws and amendments

in consultation with procurement departments to reflect

these in business processes. Second, the Department

helps procurement staff to embed compliance in their

behaviors and promoting compliance through regular

trainings. It also encourages the staff to conduct inspec-

tion and correction by themselves through checklists

with respect to subcontracting regulations, preventing

law violation risks. Finally, the Legal Affairs Department

provides procurement staff with professional consulta-

tion on issues related to subcontracting laws and their

applications, preventing exposure to non-compliance risk.

Systematic Subcontracting Law Compliance

LSIS has undertaken various activities to build a systemat-

ic approach to fair trade and subcontracting compliance.

As part of these efforts, we updated our ‘Subcontracting

Basic Agreement’ in accordance with the Fair Trade Com-

mission guidelines in 2014 to build a fair and transparent

business relationship with suppliers. In addition, we are

annually renew the ‘Pledge to Ethical Management Prac-

tice’ with all suppliers when signing the basic agreement.

In 2014, we signed subcontracting and ethical manage-

ment agreements with 416 suppliers to ensure mutual

fair trade. Moreover, we have adopted the Fair Trade Com-

mission’s 4 key guidelines to company regulations in or-

der to systematically manage subcontracting regulation

compliance. The Internal Subcontracting Inspection Com-

mittee headed by the CPO checks violations of relevant

laws and fair trade practices from supplier selection to

transaction termination through monthly meetings.

Supplier Survey Results

We conduct an annual survey of suppliers and other

partner firms with continuous business transactions to

assess their satisfaction level in terms of our ethical man-

agement activities. The survey covers the entire processes

ranging from supplier selection and contracting to oper-

ation and their opinions and recommendations are used

for vital data in developing our directions for ethical man-

agement. Suppliers’ satisfaction level on our ethical man-

agement (out of a possible 5 points) has been showing

consistent improvement every year.

Disseminate Sustainability Management to Suppliers

Practice of Action Plans

With the belief that stable and balanced growth of sup-

pliers will help us reduce risks and raise product compet-

itiveness, we are encouraging them to adopt sustainabil-

ity management system. As part of this, we implement

environmental safety assessment of new suppliers and

partially reflect their sustainability management activi-

ties in our supplier evaluation. In addition, a roadmap for

spreading sustainability management to suppliers was

established to enhance their capabilities and responsibil-

ities. Based on the roadmap, we plan to provide suppliers

with special lectures and regular trainings on sustainabil-

ity management to form a consensus in the short term,

while developing indices to diagnose their sustainability

and applying them to the selection and evaluation of sup-

pliers in the mid to long term. By doing so, we will con-

tinue to help suppliers reduce both current and potential

risks and consequently build the foundation for win-win

growth with them.

29 17.32013

20

2014 2014

billion

2013

14.8 billion KRWKRW

Ethical Management Satisfaction Index (Suppliers)

2012

4.13

4.19 4.19

2013 2014

4.19in 2014


Improve Effectiveness of Win-win Growth Programs

Expand Win-win Growth Foundation

Build the Mutual Growth Payment System

LSIS first started the Mutual Growth Payment System

which provides financial aids to not only 1st-tier but

2nd-tier and 3rd-tier suppliers in the industry. This system

allows 2nd-tier and 3rd-tier suppliers to issue ‘Win-win

Sales Bond’ by utilizing trade receivables from LSIS as col-

lateral and to liquidate the bond at the same low interest

rate granted to large enterprises, which ensures better

liquidity. In 2014, a total of 51 suppliers issued 272 bond

issues worth KRW 45 billion, a sharp increase from the

previous year, through the system. We plan to make this

system more active in 2015 by expanding the pool of par-

ticipating banks. Through this, we hope to help suppliers

reduce difficulties in collecting payments and concerns

about dishonor. Consequently, this system is expected

to substantially contribute to boosting win-win growth

with our suppliers and improving the national competi-

tiveness.

Agreement on Win-win Growth between 1st-tier and

2nd-tier Suppliers

To establish a culture of voluntary fair trade and win-win

growth between 1st-tier and 2nd-tier suppliers, LSIS signs

agreements on win-win growth among the three parties.

The agreements emphasizes compliance with the Fair

Trade Commission’s 4 key guidelines for subcontract-

ing and commitment of 1st-tier suppliers to spreading

our win-win growth policy to 2nd-tier suppliers. In 2014,

25 1st-tier and 19 2nd-tier suppliers signed a total of 75

agreements. We plan to expand the number of agree-

ments between 1st-tier and 2nd-tier suppliers in 2015 to

make this a meaningful activity towards win-win growth.

CEO Visits to 1st-tier and 2nd-tier Suppliers

As part of our effort for win-win growth with suppliers, our

CEO has visited 2nd-tier suppliers’ onsite and had time to

communicate with them. In 2014, he visited 3 suppliers

and held onsite forums with 11 companies to discuss LSIS

business strategies and operational directions along with

ways to enhance cooperation and improvement. We plan

to dispatch quality management specialists, improve pay-

ment conditions, and provide financial assistance in order

to help both 1st-tier and 2nd-tier suppliers gain tangible

benefits through the win-win growth activities.

Improve Productivity

Financial Assistance

LSIS has provided suppliers with financial assistance at

low interest rate for their stable production. In 2014, we

raised a total of KRW 20.2 billion - KRW 2.8 billion for direct

support, KRW 14.2 billion for combined support, and KRW

3.2 billion for special support. And a total of KRW 17.3 bil-

lion was supported to 70 suppliers for working capital and

investments directly and indirectly. We plan to expand the

scope of financial assistance to 2nd-tier suppliers in 2015.

Training Support

We develop and offer various training programs meeting

suppliers’ needs with the purpose of securing world-class

quality. In collaboration with universities and specialized

education institutions, we operated 5 courses, including

injection molding expert and FTA origin specialist training

courses, free of charge. In addition, we opened 9 courses

on quality and production management for employees of

suppliers based on job function and rank. In particular, we

dispatched our design and quality specialists to perform

specialized on-site training for more meaningful support

to suppliers, which was especially well-received. These

efforts have led to training of 1,005 persons on various

topics including quality, production, finance, FTA, and in-

jection molding in 2014 alone, contributing to enhancing

the quality competitiveness of suppliers.

Guidance for Process Quality Management

In order to secure quality competitiveness from the stage

of purchasing raw materials, LSIS dispatches internal

specialists to guide the management and improvement

of process quality. Our specialists visited 42 suppliers 91

times and completed 737 improvement support tasks

in 2014. This has helped suppliers become aware of the

importance of quality and process management so that

they may independently and competitively manage their

processes. In 2015, we plan to extend this support to

2nd-tier suppliers as well.

Strengthen Technology Development Capacity

Technology Sharing Program

In collaboration with the Korea Institute for the Advance-

ment of Technology (KIAT), LSIS provided 290 unutilized

technologies to SMEs through the Technology Sharing

Program. LSIS became the third company to participate in

this program after SK Hynix and LG Display. A total of 222

domestic and 68 foreign technologies with regard to pat-

ented and utility model in the heavy electrical equipment

industry. Under this program, we donated 40 domestic

and foreign patents to 9 SMEs in 2014. We will continue

to provide supports in collaboration with the government

so that our suppliers can improve R&D capability and suc-

ceed in commercializing transferred technologies.

New Product Development with Conditional

Purchase Option

LSIS is participating in the government-led ‘New Product

Development with Conditional Purchase Option’ program

with suppliers to both enhance technology development

capacity but also increase sales. Through this program,

we conducted 3 projects including the ‘Localization of

HVDC Power Supply’ with Ejins in 2014. We will continue

to jointly participate in this program, which helps secure

sales channels from the stage of product development, to

stimulate suppliers’ R&D mindset and promote the local-

ization of equipment.

Commissioned Development Projects

In order to improve R&D capability of suppliers and tight-

en relationships with them, we carry out national and pri-

vate research projects. We commissioned a total KRW 2.9

billion worth of 54 research projects in 2014 and plan to

continue to expand the number of projects.

Category 2013 2014

Suppliers visited 34 42

No. of visits 45 91

No. of supports 275 737

Guidance for Process Quality Management

win-win Growth

Utilization of the Mutual Growth Payment System

41 cases

272 cases

2013.8~12 (5 months)

8.56

0.48

(13)(2)

2014.1~12 (12 months)

5.73

39.30

(32) (19)

1st credits issued 2nd credits issued

No. of issues

Launching ceremony of the Mutual Growth Payment System CEO’s visit to the 1st and 2nd-tier suppliers and forum with them

(Unit: KRW in billions, firms)

Joint Execution of Commissioned Development Projects

2012

1.9

2013 2014


billionKRW

in 2014

2.9

32 cases

40 cases

54 cases

2.1

2.9

Fund Size

Financial Assistance for the Suppliers


No. of Suppliers Supported

(Unit: firms)

Direct Combination Special

2012 2013 2014

43

66 70

5

38

53

13 16

43

11

13.5

15.8

20.2

2012 2013 2014

12.5

1.0

13.2

2.6

14.2

2.8

3.2

Performance (Unit: KRW in billions)

2012 2013 2014

9.7

14.8

17.3

8.7

2.7

12.6

2.1

1.6

13.2

1.0


Domestic and International Benchmarking

We operate a benchmarking program that provides ACE

CLUB members with chances to visit advanced companies

inside and outside Korea and to better understand rapidly

changing competition environment. Performances include

visiting 17 advanced companies in 5 countries and 3 do-

mestic excellent companies and participating 3 overseas

exhibitions from 2008 to 2014. A total of 210 employees

of suppliers attended this program, experiencing changes

in global market environment and best practices. We will

continue to operate this program for nurturing excellent

suppliers.

Communication and Information Sharing with Suppliers

Performance Sharing

The company holds the Performance Sharing Meeting ev-

ery quarter not only to share our business vision and per-

formances with suppliers but also create shared value and

expand communication and cooperation. In 2014, a total

of 610 employees from 585 suppliers participated in this

meeting, through which they shared various performances

with respect to product quality, delivery, procurement poli-

cy, excellent win-win growth practices, and special lectures.

The Performance Sharing Meeting has helped us form a

consensus on win-win growth with suppliers and we plan

to expand the scope of this meeting to 2nd-tier suppliers

in the future.

Partner Exchange Meeting

In 2014, we conducted 4 exchange meetings with the

CEOs of suppliers in different business sectors, where our

executives visited suppliers for in-depth communication.

Through the meetings, we carefully listened to their voic-

es and debated ways to cooperate with each other and

enhance business competitiveness. We also took advan-

tage of the meetings to identify and rectify inefficient

business practices that had become customary in order

to achieve win-win growth.

Talk Concert with the CPO

The CPO of our company visited suppliers once a quar-

ter in order to expand communication opportunities

with them and listen to their difficulties and suggestions,

through which we were able to understand how they rec-

ognized and felt our win-win growth policies. And, at the

same time, we discussed ways to improve delivery pro-

cess and operate efficient quality management policies

through the talk concert.

Manage Overseas Supply Chain

Regional Procurement

As the nation’s leading heavy electrical equipment com-

pany that produces core equipment ranging from electric

devices to industrial automation systems, LSIS purchases

raw materials worth of about KRW 1.32 trillion from sup-

pliers of 31 countries annually. Regional breakdown of

procurement is as follows: Korea (82%), China (10%), Eu-

rope (3%), Japan (2%), and other parts of Asia (2%).

ACE CLUB

About ACE CLUB

ACE (Active, Challenge, Excellent) CLUB is LSIS’ unique

program to certify excellent suppliers, which aims to en-

courage them to build a culture of innovation and secure

world-class competitiveness. ACE CLUB members are

selected annually based on a comprehensive evaluation

including quality, price, delivery, process management,

and commitment to win-win growth. ACE CLUB members

are given preferential payment conditions, training and

education opportunities, and R&D support, which helps

enhance QCD competiveness. As a result, the number

of suppliers with over KRW 10 billion procurement has

increased to 10 in 2014 from 2 in 2008. ACE CLUB will

become a catalyst for promoting sustainability manage-

ment activities of suppliers in the future.

Management Seminars

We hold a seminar for the CEOs of ACE CLUB members

once a year to share knowhow with respect to manage-

ment strategy, finance, marketing, leadership, and the

economy. A total of 163 CEOs of suppliers have partici-

pated in this seminar since 2008. In particular, experts in

each field give special lectures and our executives offer a

forum to discuss major issues in the industry and how we

should work together. Moreover, ACE CLUB members can

share successful innovation strategies and cases through

this seminar, offering a chance for well-intentioned com-

petition. This seminar will continue to help suppliers not

only have a chance to learn management knowhow but

communicate their difficulties with our executive and de-

liberate on future directions.

Special Task Force on Innovation

LSIS provides ACE CLUB members with the ‘Special Task

Force on Innovation,’ a talent cultivation program, in or-

der to help them grow into strong companies with global

competitiveness. This program aims to reinforce suppliers’

corporate competitiveness by upgrading productivity

based on quality innovation, in which employees of ACE

CLUB members participate. In 2014, this program con-

tinued for 10 months with the contents of consulting

services by external specialized institutes and collective

trainings to raise the awareness of quality, enhance data

control, and innovate product quality. Participants who

complete this program play a role as innovation leaders

and candidates for the next-generation management in

their companies. The number of participants was 40 from

14 suppliers in 2012 and 143 from 29 suppliers in 2014.

Performance sharing - special lecture on humanities Exchange meeting with partner firmsPerformance sharing - agreement on win-win growth

win-win Growth

ACE CLUB Management Seminar - workshop

ACE CLUB Management Seminar - special lecture

2008 201420132012201120102009

21

2

29

10

20

11

20

9

28

7

26

4

97.7142.0

207.8 214.7251.0 229.4 247.4

4.7 5.5 7.410.7

13.2 11.58.5

19

12

Innovation Task Force - education to improve process and quality management

14

20

29

2012 2013 2014

Suppliers

29

(Unit: firms)

40

74

143

2012 2013 2014

Participants

143

ACE CLUB Status

Total No. of ACE CLUB members No. of ACE CLUB members with over KRW 10 billion in purchasing Purchasing amount (KRW in billions)

Purchasing amount per member (KRW in billions)

Visit to LSIS China subsidiary for benchmarking

Visit to Japanese TPS site for benchmarking on innovation

(Unit: persons)

in 2014

in 2014

firms

persons

Completion of the Innovation Task Force Program

03


2014 Material Issues

‘Build open communication

culture’

2015

‘Secure global business

capability’

2016

‘Establish global human rights policies’

2017

Expand employee communication

Pursue work-life balance Attract and nurture talents

Strengthen company-wide human rights and labor policies

Evaluate and compensate fairly

Pursue work-life balance

Attract and nurture talents

Strengthen company-wide human rights and labor policies

Management Issues


Pursue Work-Life Balance

Events for Employee Families

Various family events are held to offer opportunities for

open communication among employees and to inspire

their families with pride in the company. In particular, for

the employees who were promoted to managerial level,

the company hosts an event where the families of the em-

ployees and company executives are invited. Starting in

2011, the event serves the purpose of assuring the impor-

tance of the manager role as well as thanking the families’

support. We also hold events to invite the parents of new

recruits. The parents of new recruits visit the company and

experience the working environment of their sons and

daughters, while sharing the company’s corporate vision.

Family-friendly Programs

Under the motto, “as a happy home makes a happy work-

place,” LSIS runs various programs serving the needs of

the employee’s family. Designating the second Friday of

each month as ‘Family Day,’ we encourage employees

to leave work on time for better relationships with their

families. Since 2011, we have been rewarding employees

with the ‘Filial Behavior Award,’ a program in which indi-

vidual employees are evaluated and selected for cases of

filial behavior. Other programs include Summer/Winter

English Camps for employees’ children, Children’s Day

event, trips, operation of recreation centers in summer,

film screening event, and others. As such, LSIS provides

employees with opportunities to set aside work to create

precious memories with their families.

Workplace Nurseries

LSIS is operating nurseries in the workplace, supporting

employees to balance their work and life. Our Cheongju

plant had opened a nursery in the Cheongju Industrial

Complex in March 2014, and the headquarters and the

R&D Campus in Anyang started the operation of a nursery

in March 2015. The nurseries are commissioned to agen-

cies specialized in child care, ensuring that the children of

LSIS employees will be nurtured in a safe environment,

provided with excellent care.

Concentrated Vacation System

We run a system which allows all employees to go on

a concentrated vacation within the limits of their paid

leaves and personal vacations, which are fixed by related

laws and collective agreements. It is a system that helps

employees balance work with home. It is implemented

after long term projects or personal events, allowing em-

ployees to regain strength and return, thus enhancing

business efficiency. Apart from summer vacation, all LSIS

employees are given concentrated breaks at the first half

and latter half of the year (3~5 days), which provides em-

ployees with an opportunity to rest and return.


Pursue

work-life balance

• Implemented Rest (休) Weeks (concentrated vacations) • Promote the use of Rest (休) Weeks system HR Team

• Acquired certification as a family-friendly company • Strengthen family-friendly management

• Opened workplace nursery (Cheongju) • Open workplace nursery (Anyang)

• Hosted employee family events • Expand employee family events to more business sites

Attract and

nurture talents

• Operated various channels for talent recruitment

(Corporate funded scholarships, lab tour, internships)

• Establish aggressive recruitment and promotion strategy

• Secure communication channels of potential recruits

• Increased employee education costs and time • Expand operation of global capacity building program

Strengthen company-wide

human rights and

labor policies

• Conducted self-evaluation of human rights and labor standards • Establish human rights policies

• Activate labor and human rights related processes

• Provide training on labor and human rights policies and related issues

HR & Relations

Management Team

Expand employee

communication

• Reinforced existing communications channels • Activate communication through the affiliation of

communication channels

Innovation &

Culture Part

Employee SatisfactionCultivating global talents and improving employees’ quality of life


We will secure global business capability by becoming united under the same agenda

through an open communication culture. Furthermore, we aim to enhance the quality of

life for all employees by establishing policies to support them at all operation sites and

building systematic monitoring process.

Education expenditure per person Welfare expenditure per person

millionmillionKRW KRW KRWKRW millionmillion1.12013

12.7 13.2

LSIS Daycare Center

2013

2014 2014

1.3

Children’s Day event

Family event for employees promoted to manager level

Cultural outing for employees’ children


college seniors in their spring semester allows them to ex-

perience LSIS’s vision and corporate culture beforehand

through undertaking jobs and tasks beforehand. Other

programs include plant tours for university students,

participation in the Human Resources Program in Energy

Technology, and so on, which provide them with opportu-

nities to have a positive impression toward LSIS.

Direction of Cultivating Talents

In the past when the half-life of knowledge was extend-

ed, experiences could become skill. However, in the vastly

changing modern society characteristic of globalization,

advancement of technology, and changes in law, having

only experience one will fall behind. In order to secure

and exhibit professionalism in the global market, LSIS is

supporting systematic training and education programs

that will nurture talents.

Human Resources Development

For efficient human resources development, LSIS provides

systematic and well-organized education and training

programs with regard to class, globalism, organizational

development, and professionalism. In addition, the CDP

(Career Development Program) is running for helping all

employees manage their entire job careers from joining

to leaving the company.

Caring for New and Experienced Employees

LSIS operates retention events and systematic talent

development programs to effectively care new and ex-

perienced employees. We provide new graduate recruits

with a message from the CEO and flower basket and take

them on tours of the Jeju Pilot HVDC SMART CENTER, al-

lowing them to be proud of joining the company. Other

programs include entry-level education to introduce the

group and the company, mentoring program, on-the-job

training, basic job training course by each value chain, and

LS Future Camp which aims to assist employees who have

finished their first year to set visions. Moreover, we help

new employees adjust to the organization and fulfill their

potential with the On-boarding Package. We also strive

for continuous communication through the frequent VOE

(Voice of Employee), which caters to employees who have

newly joined the organization.

Attract and nurture talents

Ideal Employee and Recruitment Philosophy

LSIS seeks after individuals that can, on the basis of

LSpartnership, share the Core Values of Collaboration,

Execution, Creativity, and Integrity. An ideal employee

will also be Positive, Creative, and Professional. With this

in mind, LSIS strives to recruit talents that show compe-

tence, while avoiding homogenous recruitment. Through

recruiting talents with global competitiveness and posi-

tive mindset as well as a spirit full of challenge, LSIS pur-

sues becoming a ‘Great Company’ loved by customers.

LSIS also aims to become a company that immerses itself

in achieving individual and corporate goals as passionate

professionals join forces. To this end, LSIS is operating a

fair and transparent system which does not discriminate

based on individual characteristics such as education, age,

gender and race.

Status of Global Talents

With the strategic direction of evolving into a leading

global heavy electrical equipment company, each busi-

ness site in the world is striving to recruit and cultivate

global talents. As of the end of 2014, around 1,400 work-

ers are employed at either both production and sales

corporations including China, Vietnam, and Japan or ten

overseas branches including the United States, Europe, In-

dia and Vietnam. In order to advance into global markets

and boost sales, LSIS has been continuously striving to re-

inforce human resources’ competitive edge in the global

market. Also, it has been gradually expanding global re-

cruiting at North America, China and Europe, attracting

global talent.

Attract Global Talents

LSIS has been strategically introducing human resources

to core business projects by public recruiting new and

experienced workers. Furthermore, by enforcing global

recruiting policies which target students staying abroad

in universities at North America, China, or foreign intellec-

tuals in the R&D field, LSIS is reinforcing its competitive

edge in the global market. Particularly, regarding R&D

human resources for the company’s new core businesses

and talented workers with enough experience, LSIS is also

operating a year-round recruitment program. We also uti-

lize various contact channels such as on-campus recruit-

ment, employee recommendation, and search firms to at-

tract talents meeting our businesses in early stage. Under

the situation where corporations struggle to preoccupy

talented workers, LSIS is also endeavoring to attract ex-

cellent and professional human resources. By providing

constant support through corporate funded scholarships

to Masters and Doctorate candidates, LSIS gives them the

opportunity to study their specialties and join the com-

pany afterwards. Also, we conduct the Lab Tour program

to visit outstanding electricity and electronic engineering

labs at universities in order to continue exchange with

schools and students. Our internship program targeting

employee satisfaction

2012

1,0551,088

1,337

2013 2014

1,337

New recruits training in Jeju LS Future CampWelcoming event for new recruits

The LSIS Ideal

Greater value together!

Positive Creative Professional

People who are energetic and positive-mind-

ed, who work well with fellow coworkers, and

who adhere to ethical procedures at work.

People who lead in developing the com-

pany into a global enterprise by pursuing

changes and innovation and creating value

on the basis of creative ideas.

People who incessantly strive to become

the best in their jobs, have keen under-

standing of ever-changing global business

environment and the competency and

passion to compete globally.

Energetic, positive-minded, ethics

Change, innovation, performance-driven

Professionalism, self-development, global mindset

Collaboration Execution Creativity Integrity

Class Organizational Development

Professionalism Globalism

4536,703

2,114 6,996

* 1PD = Off the job training 8h, Cyber 1M

Education and Training in 2014(Unit: PD*; persons per day)

in 2014

Training Costs (Unit: KRW in thousands/person)

thousandKRW

2012

10 1011

2013 2014

11in 2014

Education Hours (Unit: PD/person)

PD

Class Educate knowledge, skills and attitudes required by

one’s position, rank and duty

Globalism Educate languages and culture related to

a global environment

Organizational development

Internalize management philosophy, main values,

and organization culture

Professionalism Educate knowledge with the aim of nurturing

professionals by each value chain


Expand Employee Communication

Philosophy and Strategy for Communication

Upon the inauguration in 2008, the CEO Ja-Kyun Koo

emphasized transforming the corporate culture with the

statement that it is essential for us to grow into a global

company. Since then, we have made continuous efforts

to build a culture of communication. We are now deter-

mined to open the era of value-focused management,

where qualitative and quantitative growth is balanced.

With a new clear value system, the management, the

company, and the employees are striving to harness ca-

pabilities toward one direction. Leader groups are helping

members to improve themselves and focus on their work,

and members are making concerted efforts to become

professionals in their respective fields and to foster global

competitiveness. Like this, we at LSIS are endeavoring to

create better corporate value.

Employee Communication Channels and System

Communication Enhancement Programs

LSIS seeks to vitalize internal communication and to cre-

ate a cooperative environment by building a corporate

culture to inspire voluntary participations, open commu-

nication, and social contribution activities.

1. Open Office

Facilitate open and equal communications between lead-

ers and members by always opening the door of the lead-

er’s office room

2. Harmony Day

Make opportunities to communicate and cooperate among

relevant departments to eliminate misunderstandings and

strengthen focus on work

3. Changing Positions

A work function exchange that allows employees to ex-

perience operations in different units in order to raise un-

derstanding of other units and to promote cooperation

4. Standing Meeting

Take time to share the direction of team tasks, status of in-

dividual work progress, and thinking about recent issues

among team members every morning

5. A Million Roses

The company’s unique communication program to com-

plement and encourage each other. If there is a person

who would like to praise or encourage, he or she delivers

a rose voucher with a compliment message. The recipient

can exchange the voucher for food and beverage at the

company store or café. Vouchers can also be passed on

other persons for a compliment relay.

6. How-to Session

A workshop program to encourage every members to

freely and honestly develop solutions beyond just tradi-

tional meetings between leaders and members. Under

the theme that the answer to our question is at the site,

members are able to jointly solve any problem through

a workshop for two to three hours with their leaders and

other members.

Strengthen Human Rights and Labor Policies

Respect for Human Rights

LSIS has put in place an institutional strategy to prevent

discrimination with regard to gender, race, religion or re-

gion of origin in recruitment, promotion, salary, and wel-

fare benefits. We also fundamentally prohibit any form

of child labor or forced labor and strictly comply with

related domestic and international laws. As a result, there

has been no single infringement in terms of these since

the foundation, which was attributable to our efforts to

continuously improve our policies in respect of human

rights. In 2014, as part of our sustainability management

assessment, we have evaluated our human rights and la-

bor policies. Based on the results, the company improved

relevant policies and process to deal with human rights.

Ensuring Basic Labor Rights

With the recognition that labor union is a partner for our

businesses, we held negotiations on wages and collective

agreement. We specified a phrase ‘The Company enters

into collective discussions on equal terms as the labor

union’ on the statement to respect the right of collective

agreement. In cases of critical changes in business envi-

ronment, we inform the facts to the labor union in a set

period. In addition, activities of the labor union and its

members are guaranteed without any disadvantage.

Labor-Management Partnership for

Win-win Growth

LSIS operates the Labor-Management Working Taskforce

Team (TFT) in order to improve mutual understanding

and reduce the distance between labor and manage-

ment by sharing information necessary to address issues

promptly and proactively. The quarterly company-wide

Labor-Management Council and Labor-Management

Council by each business site also discuss working con-

ditions and welfare and benefits along with personnel

deployment and shifts, company growth strategies, and

management issues with the labor union to reflect their

voice for mutual growth. In particular, regular labor-man-

agement forums and table-top discussions are operated

in order to emphasize open communications. Moreover,

the management visits not only domestic business sites

to explain the company’s quarterly performance to labor

union officials, but also overseas subsidiaries together

with labor union officials in order to directly experience

global business environment and form a consensus.

Meanwhile, we operate several groups representing em-

ployees such as LinkerS, Smart Board, and Ace Board as

well as regular forums for different classes and depart-

ments, contributing to improving employees’ working

environment and treatment.

Labor-Management Relations

LSIS pursues labor-management relations based on

equality and rational cooperation that allows both labors

and management to fulfill their duties and work towards

shared benefit creation. In compliance with the articles of

the Collective Agreement and Labor Union Charter, a to-

tal of 1,047 employees (30.6%) are members of the labor

union as of the end of 2014. The labor and management

of LSIS has built an amicable relationship on trust and as

a result, we were able to come to conclusions without

disputes on wage and collective discussions since 2003.

In addition, with the declaration of constructive com-

munications and unlimited cooperation, the labor and

management of LSIS have built a stable and cooperative

labor-management relationship.

LinkerS is a representative body to support two-way communication

between the management and staff and to build an open corporate

culture, in which one representative from each division serves a two

year term. It delivers employee opinions gathered through regular

meetings and VOE to the management.

Each team chooses one person as the communicator. He plays a role

for leading the team culture, sharing and monitoring core values, and

promoting free communication between team members and the

leader.

Labor-Management Council contributes to the establishment of healthy relationships between labor and the management based on understanding and cooperation. It also pursues increasing mutual benefits that can help the company grow sustainably and to improve the social and economic status of employees.

Our grievance resolution system helps activate communications

within our organization and to solve problems and grievances of

employees in terms of their company lives, which contributes to

boosting confidence and building a positive corporate culture.

Happiness & Improvement Card is a communication board that

allows employees to express grievances and personal requests in an

informal manner to either the CHO or HR representative and receive

feedback.

Employee groups based on function and position are able to gain

opportunities to directly communicate with the CEO, COO, head of

divisions and departments through the Management Forum, and

their opinions are reflected in our business operations.

LinkerS

Communicator

Labor-Management Council

Grievance Resolution System

Hi-Card

Meeting with Management

2012 2013 2014

No. of union

members

(persons)

Male 861 865 873

Female 171 167 165

Total 1,032 1,032 1,038

Rate of union membership 32.3% 31.1% 30.5%

Labor Union Membership

Labor-Management Council




Evaluate and Compensate Fairly

Performance Management System

Our employee evaluation is conducted with respect to

their performances and capabilities. As for performance

evaluation, targets are set in the business group, division,

team, and individual levels, respectively, through negoti-

ations at the beginning of the year. The progress of each

target is checked through daily and mid-term evaluations

and various measures are taken to assist in reaching those

targets. If those are not achieved, we identify the causes

and ways to improve. We secure fairness by requiring

meetings between evaluators and evaluees at every step

of the process and improve transparency by providing

feedback which is reflected in future goal setting and in-

dividual development plans. Business unit performances

are linked to individual evaluation grades and are used in

calculating bonuses, salary adjustments, promotions and

career development.

Compensation Program

LSIS operates various award programs to compensate

employee performances. For the most outstanding em-

ployee of the year, the ‘Green Innovator Award’ is given,

the researcher who promoted active R&D the most is

given the ‘Best R&D Award,’ there are also group awards.

In addition, we hold the Innovation Contest to award

compensations to the most innovative employees and

innovation items that contribute to the company, they

are also recognized with the ‘Patent of the Year Award.’ For

individual contributions to the company, we provide the

‘Achievement Award’ and the ‘Service Excellence Award’

to a service staff who have performed well, and the ‘Sales

Award’ is given to the highest performing sales team in

order to encourage employees.

Process

Process

Target negotiation

Target fulfillment/mid-term evaluation

Evaluation

Evaluator Business unit (team) target Frequent monitoring and evaluation Supervisor evaluation

Negotiation Inspection and support Consensus on results/feedbackMeeting

Setting individual target Self-inspection Self-evaluationEvaluee

Target cascading

Company-wide target setting Team target settingBusiness group target setting Team member’s target setting

* Present team target and action plan

Share Division Target

Confirm team performance and strategic target

Confirm team member’s performance and strategic target

Share team target

COO

GroupHead

Team Leader

Team Member

Confirm performance and strategic target of business group

Share company-wide target

* Present Group target and principle

Evaluation of progress Addition and adjustment of targetTarget setting Request target negotiation

Meeting and agreement

Self-evaluation Evaluation meeting Supervisor evaluation

Confirm company-wide management principles and strategic target

Environmental and Safety Management

04



Manage environmental products • Developed improvement plans for environmental

product management

• Redefine eco-friendly product standards

• Establish eco-friendly product development process

Technology Strategy

Department

Advance environmental management • Implemented self-assessment of environmental

management level

• Improve environmental management organizational structure

• Proactively respond to regulations with pre-checks for environment and safety

• Disclose environmental data faithfully

Environment &

Safety Team

• Conducted green purchasing

(office supplies and materials)

• Raise awareness on green purchasing amongst employees

• Expand the scope of green purchasing

• Implemented environmental investment • Enforce the environment, safety, and health inspection system (in case of investments in new

facilities, facility relocation, and change of materials)

Secure health and safety • Inspected and diagnosed the status of safety and health • Identify and respond to company-wide health and safety risk Environment &

Safety Team• Executed emergency response activities • Develop response manuals for individual environment and safety risks

• Implemented quarterly health and safety training • Evaluate safety and health training programs and develop contents

Reduce energy use and GHG emissions • Reduced GHG intensity • Respond to GHG and Energy Target Management System

Manage hazardous materials and

pollutants

• Increased process water and wastewater recycling rate

• Reduced air pollutants (dust)

• Change outdated equipment and enhance efficiency

Promote environmental management in accordance with global standards

Greenhouse Gas Emissions Occupational Accident Rate

(GHG intensity) (Cheongju, Cheonan, and Busan Plants)

0.24 0%20132013

0%

2014 2014

0.29

2015

2015년Redefine environmental product standard

2016

2015년Develop plans for environmental product

manufacturing and market creation

2017

2015년Establish in-house environmental product

certification system

2015년Establish environmental product

development process

Environmental Product Management and Image as an Environmental Company



‘Advance the level of

company-wide environmental management

system’

‘Solidify ESH* culture’

‘Zero environment –

safety risk’

2015 2016 2017

Manage environmental products Secure health and safety

Manage hazardous materials and pollutants

Advance environmental management

Reduce energy use and GHG emissions

Manage environmental products

Advance environmental management

Secure health and safety


To realize our mid- to long-term goal of ‘zero environmental and safety risk,’ we will con-

tinue to advance company-wide environmental and safety management system in the

short term. We also plan to upgrade the safety level of products and business sites in

order to grow into a global eco-friendly company.

Ton/million KRWTon/million KRW

<Environmental Management Guidelines>

1. Minimize environmental impacts throughout the product

life cycle and fundamentally prevent pollution

2. Minimize resource and energy use by applying clean

manufacturing technologies

3. Comply with international and domestic environmental laws

and internal standards

4. Analyze environmental performance through regular

environmental evaluations and continuously improve the

environmental management system

5. Provide educational opportunities to raise environmental

awareness amongst employees and promote active

participation in environmental preservation activities

6. Make environmental data, including environmental

guidelines, available for client and stakeholder use

Manage Environmental ProductsIn accordance with the green business policy of the

government, LSIS has redefined its capabilities to cover

production, delivery, and utilization in the green energy

industry, and focused on developing and managing en-

vironmental products such as photovoltaic power drive,

photovoltaic power generation system, smart grid, EES,

EV parts, and AC Drive. We have also invested in replacing

hazardous substances, reducing pollutants, and saving

energy consumption to respond to globally environ-

mental regulations. We will continue to make concerted

efforts to develop environmental products and increase

their sales to lead the industry.

Advance Environmental Management

Environmental Guidelines

We have established and proactively complied with the

environmental management guidelines to pursue sus-

tainable growth and preserve global environment. In

2014, we assessed the current status of our environmen-

tal management and established directions for improve-

ment. Based on the results, we will not only expand the

coverage of our environmental management throughout

the company but also enhance our systems to to respond

to relevant regulations from 2015.

Environment, Health and Safety

Management System

LSIS has been operating the ESH (Environment, Safety,

and Health) management system based on its environ-

mental management guidelines. For better operation of

this system, we identify and evaluate all environmental

impacts and risks resulting from production, products,

and services, and undertake improvement tasks. Internal

and external verifications are also implemented regularly

to monitor and supplement imperfections.

Green Purchasing

Green purchasing aims to minimize environmental im-

pact by prioritizing purchase of materials with low haz-

ardous substances, high energy efficiency, and recyclabil-

ity. LSIS has been conducting green purchasing since

the establishment of guidelines in 2009. The company

purchased materials and office supplies that obtained

the Green Mark worth KRW 200 million in 2014. We will

continue to raise the awareness of employees on green

purchasing and add to the catalogue of items eligible for

green purchasing in the future.

Environmental Investment

In order to minimize on-site environmental pollution, LSIS

is proactively working on the development of green tech-

nologies and process improvement that can fundamen-

tally remove the source of pollution as well as investing in

pollution treatment and prevention facilities. In addition,

we strictly conduct evaluations on environment, safety,

and health when investing in new facilities, moving exist-

ing facilities, and changing raw materials in order to pre-

vent relevant risks.

Category 2014

Development of environmental products 4,025.1

Process improvements 180.3

Investment in environmental and safety facilities 351.3

Maintenance and repairs for environmental

and safety facilities

114.5

Total 4,671.1

Environmental investment expenditure

(Unit: KRW in millions)

Plant Green Company ISO14001 OHSMS18001

Cheongju 1991 1996.11 2008.06

Cheonan 1998.02 1996.11 2008.06

Busan 2015.02 2010.06 2010.06

* ESH: Environment, Safety, Health


environmental and safety management

Training Hours Completed (Unit: hours)

2012

63,624

64,655

73,520

2013 2014

73,520

Trained Personnel (Unit: persons)

2012

29,260

30,45330,783

2013 2014

30,783

Occupational Accident Rate (Unit: %)

Cheongju Plant

2012

0.06 0 0

2013 2014

0 %

in 2014

Cheonan Plant

2012

0.330 0

2013 2014

0 %

in 2014

Joint fire drill in Cheongju plant

in 2014

in 2014

hours

persons

Busan Plant

2012

1.03

0 0

2013 2014

0 %

in 2014

Secure Health and Safety

Organization Structure for Health and Safety

In recognition of several large-scale national disasters in

2014, we have been raising awareness on safety and ex-

ecution capacity with the motto of ‘sticking to the basics.’

To build an accident-free working environment, we built

the Health & Safety Team comprised of experts in health

and safety under the CLO (Chief Labor Officer) to identi-

fy health and safety issues and potential major risks and

continuously make improvements. The team, as a unified

organization to oversee all business sites, contributes to

enhancing the level and efficiency of health and safety

management in the company level.

Occupational Health and Safety Committee

The Occupational Health and Safety Committee aims to

improve health and safety by holding joint labor-manage-

ment discussions on site safety issues and methods for im-

provement. LSIS is also operating the committee regularly

in which equal numbers of the labor and management

participate, contributing to preventing company assets

and secure employee health. Through the committee, the

labor and management work together to share informa-

tion on the current status of health and safety operations

and related workplace issues for a progressive approach.

Health and Safety Inspections and Diagnostics

Each business site of LSIS autonomously inspects and di-

agnoses the status of dangerous equipment and machin-

ery, heavy equipment, facilities with fire risk, treatment of

hazardous substances so that safety incidents and poten-

tial risks can be removed. In addition, we commissioned

external experts to conduct evaluation of health and safe-

ty at each site and enhance independent management

capabilities. Imperfections drawn by the evaluation are

being improved through scheduled plans. Our employees

are also encouraged to attend voluntary safety inspections

to raise the awareness of health and safety. As most of our

products are heavy equipment installed in construction

sites, there is an inherent safety risk involved in installation.

The construction industry is prone to falling, slipping and

other conventional accidents. Therefore, we conduct regu-

lar safety guidance, inspections and trainings to enhance

the safety capacity of site managers and suppliers as part

of our safety management procedures aimed at prevent-

ing accidents.

Support for Subsidiaries’ and Suppliers’

Health and Safety Activities

LSIS provides supports for inspection and diagnosis of

health and safety to its subsidiaries and suppliers with lack

of experts in this field, helping establish the health and

safety system. By transferring health and safety manage-

ment technologies and evaluating the risk, we contribute

our subsidiaries and suppliers to raise the awareness of

their employees on health and safety and prevent indus-

trial incidents.

Emergency Response Activities

We are striving to prevent potential risks and enhance cri-

sis management capability to secure optimal emergency

response capacity. Though prevention is the utmost prior-

ity, rapid response to accidents is also an important factor

to manage. As such, based on the results of our risk as-

sessment, we have built an Emergency Response System

that corresponds to the different categories of key safety

risks, enabling employees to respond rapidly. In addition,

we run regular emergency response drills and have built

a support network with neighboring companies and com-

munities to provide mutual support during emergencies.

Our research center in Anyang invited the Anyang Fire De-

partment to conduct training on how to respond to fires

and other disasters. Our Cheongju plant received the 2014

Corporate Excellence in Fire Department Support Award

from the governor of Chungcheongbuk-do in recognition

of upgrading emergency response capacity through in-

house trainings. In addition, it invested KRW 300 million in

an automated fire detection system which will be in oper-

ation from 2015.

Improvement of Working Environment

LSIS is making various efforts to provide employees with a

pleasant working environment. With the goal of enhanc-

ing our human resource competitiveness and providing a

healthy workplace, we regularly measure exposure levels

of physical and chemical contaminants and metals and

dust particulates. To improve the office environment, we

monitor indoor air quality and also operate programs to

prevent muscular skeletal disease and hearing loss.

Health Enhancement Activities

LSIS supports our employees’ health by providing regular

health examinations in connection with local hospitals. We

also operate on-site health care centers that offer educa-

tion, medical consultation, physical therapy, and other ser-

vices to prevent and treat diseases, at which employees are

able to get counselling on their health management from

professional nurses and experts. As our society’s interest

in individual health increases, we are operating health

enhancement programs focused on the 5 major diseases

of high blood pressure, diabetes, high cholesterol, liver/

intestine conditions, and obesity in collaboration with lo-

cal offices of the Korea Association of Health Promotion

and the National Health Insurance Service. In addition, we

opened a non-smoking clinic and run non-smoking cam-

paigns to help prevent various disease caused by smoking.

For voluntary participants trying to quit smoking, we offer

frequent carbon monoxide measurements, smoking ces-

sation information, consultation with external experts, and

a smoking cessation fund.

Education on Environment, Health, and Safety

All employees of LSIS are required to complete educa-

tions on health and safety which cover basic response to

potential works and safety operations when joining the

company. For employees handling hazardous materials

such as chemicals, the ‘Special Health and Safety’ course

is required. These courses help them embed the mindset

of environment, health, and safety. Educations tailored to

each business unit’s operations are conducted regularly as

well. Moreover, supervising staff undergo remote training

from external specialists (16 hours per year) and, receive

quarterly collective training from the LSIS Environment &

Safety Team, primary unit responsible for health and safety.


Reduce Energy Use and GHG Emissions

Energy Consumption

LSIS has been consistently investing in efficiently man-

aging energy consumption based on mid to long term

reduction plans. Our main indirect energy consumption

comes from electricity used for product manufacturing

and LNG gas used for heating and cooling, of which elec-

tricity and LNG gas accounted for 85% with 12,045.1 TOE

and 15% with 2,168.4 TOE, respectively, in 2014.

GHG Inventory

As regulations on carbon emissions are becoming more

stringent globally due to climate change, LSIS is taking

an active stance to this trend with the establishment of

a task force team. We enacted internal GHG regulations

and standardized calculation manuals in order to system-

atically manage emissions. Our main emissions were SF6

and CO2, of which SF6 emitted from insulation materials

accounts for about 88% of total emissions and indirect

emissions represent about 9%. In 2013, we compiled a

GHG inventory and received a third party verification for

reliability and another verification is scheduled in 2015.

Through these processes, LSIS identifies GHG related risks,

develops environmental products, and reduces energy

consumption.

Energy and Emissions Reduction Performance

LSIS is making tireless efforts to reduce energy use and

GHG emissions in order to contribute to combatting cli-

mate change and be a leading Green Company. As such,

we have established emissions reduction targets by fore-

casting and analyzing energy use for each facility. In addi-

tion, we have adopted renewable energy, built automat-

ed control systems, and are continuously replacing old

equipment with high-efficiency equipment.

[Investment in Insulation Materials Recovery Devices]

SF6 gas used as an insulant in production of ultra-high

voltage equipment is one of the 6 main greenhouse gas-

es and has a higher global warming potential than carbon

dioxide (CO2). LSIS tests completed products before instal-

lation by inserting SF6 and recovering the gas used in the

test. In this process, SF6 is emitted. We have invested in a

high-efficiency SF6 recovery system to increase the recov-

ery rate. We plan to increase efforts to develop ultra-high

voltage equipment that uses environment-friendly insu-

lants instead of SF6.

[Adoption of Automated Heating and

Cooling Control System]

We are operating an automated heating and cooling

system that uses a web based software to control indi-

vidual heating and cooling. When the target temperature

is reached, the system computes energy consumption

based on each facility’s individual energy savings poli-

cy to reduce the electricity load of heating and cooling

equipment, minimizing energy loss and maintaining a

pleasant working environment. We expect that adjusting

the indoor temperature 1℃ using this system will result in

7% reduction in energy consumption.

[Adoption of High Efficiency Utility Facilities]

By replacing the fluorescent and metal halogen lighting

in our offices and plants to efficient LED lighting, we saved

roughly 665MWh in energy and reduced 300 tons of GHG

emissions. In addition, the replacement of out-of-date

transformers to high efficiency models increased energy

efficiency by 35%.

[Introduction of FEMS]

In 2015, we introduced our own Factory Energy Man-

agement System (FEMS) which is an integrated solution

that maximizes energy efficiency at our Cheongju plant.

Furthermore, we plan to install a 2,000kW roof-top photo-

voltaic power plant that can generate approximately 2.5

million kWh a year, which is expected to have the effect of

planting 243,000 pine trees. A 1,000kW EES system, which

is getting the limelight, will also be installed to respond

to peak load and reduce electricity consumption. Oth-

er plans for reducing electricity consumption and GHG

emissions include replacing out-of-date boilers, chillers

and heaters, variable air volume HVAC with high efficien-

cy equipment, and installing drives and lighting control

systems.

Respond to Climate Change

We signed an agreement on voluntary emissions reduc-

tion with the government and our Cheongju Plant be-

came subject to the GHG and Energy Target Management

System in 2014. According to this, we plan to conduct a

third party verification on our GHG inventory and build

a database to manage energy savings, efficiency, target

achievement, and investments in facilities which we will

report annually. In addition, since 2011, we have been

participating in the Carbon Disclosure Project (CDP)

which evaluates corporate carbon management, includ-

ing emissions strategy and statistics. Through the CDP, we

have disclosed our commitment to carbon management,

reduction targets and performance, and risks and oppor-

tunities.

Manage Hazardous Materials and Pollutants

Management of Hazardous Materials

LSIS stringently manages hazardous chemicals from

warehousing to use and disposal. We are replacing highly

hazardous materials for eco-friendly materials through

ceaseless process improvements and each business site

conducts regular trainings on handling hazardous materi-

als and emergency response steps based on Globally Har-

monized System-Material Safety Data Sheet (GHS-MSDS).

In addition, we post safety signs, safety gear and preven-

tive chemicals at the main handling points and conduct

regular safety drills in order to raise employees’ capacity

to respond to accidental exposure.

Water Consumption

Our Cheongju plant and Cheonan plant receive water

from Daecheong Dam and Busan plant receives water

from Nakdong River. In 2014, a total of 230 km3 water

was supplied to these plants. As our process water is not

sourced from wetlands, there is no major environmental

impact. However, as the UN has reported that Korea is in

water shortage, we are taking various measures to reduce

our water consumption such as adjusting the pressure of

water supply, maintaining and repairing utility facilities,

and operating a wastewater recycling system. We will con-

tinue to improve our equipment and undertake various

activities to reduce our water usage.

Wastewater Management

LSIS is enhancing production processes in an eco-friendly

manner to reduce wastewater generation. Wastewater is

entirely treated by specialized companies and regular wa-

ter quality analysis is performed in order to obtain objec-

tive wastewater composition data so that we may comply

fully with changes in related regulations. Our Cheonan

plant invested in a wastewater recycling system to reuse

process water and was able to reduce wastewater gen-

eration by 80%, significantly reducing the impact on the

environment.

Air Quality Management

LSIS is working to improve air quality for our employees’

health and local communities by improving processes

and replacing raw and source materials. Air pollutants

are stringently managed by setting internal criteria under

50% of the legal limit, and pollutant prevention facilities

are operated optimally through continuous inspection.

We will also replace out-of-date equipment progressively

based on mid to long term plans.

Waste Management

LSIS is striving to reduce material input and enhance

productivity throughout the product lifecycle in order to

minimize waste. Employees are encouraged to routinize

waste sorting in their works and take appropriate mea-

sures to minimize pollution for items that cannot be re-

cycled. In addition, we conduct inspections of our waste

management contractors prior to contracting in order to

ensure compliance with disposal practices. As a result of

these efforts, our recycling rate increased to 78.5% of total

waste in 2014.

Waste Recycling Rate (Unit: %)

2012

76.075.2

78.5

2013 2014

78.5%

Energy Consumption (Unit: TOE)

2012

11,930.1 12,099.1

2,224.8 2,142.3

12,045.1

2,168.4

2013 2014

Electricity Gas (LNG)

GHG Emissions (Unit: ton)

2012

198,745.6

291,037.2

226,731.0

2013 2014

Scope 1 Scope 2

174,302.1

24,443.5 266,289.6

24,747.6

201,620.3

25,110.7

in 2014

environmental and safety management

Risks and Opportunities from Climate Change

Category Risk Factors

Legal

factors

• Energy Target Management

Scheme

- Costs arise if government quota

is exceeded

Physical

factors

• Temperature increase due to

global warming

- Increase in electricity costs due

to cooling needs

Other

factors

• Corporate reputation

- Failure to establish

environmental corporate image

may lead to loss of business

Category Risk Factors

Legal

factors

• Tightening of product energy

efficiency related laws

- Sales increase from Green

Business

Physical

factors

• Increase in use of natural energy

sources

- Increase in sales of switch/

circuit breakers and power

generation systems

Other

factors

• Corporate reputation

- Preoccupancy of global

markets by enhancing our

environmental corporate image

and providing efficient and safe

green solutions

Social Contribution

05



Develop flagship social

contribution programs

• Implemented social contribution programs in connection with LS

(LS Dream Village, LS Dream Science Class)

• Participate in collaborative social contribution

programs with LS

Public Relations Team

• Executed programs linked to LSIS businesses • Develop and implement LSIS’s flagship programs in social contribution

Build a system for social

contribution activities

• Organized social contribution implementation system • Document social contribution policies

• Establish mid to long term social contribution strategy

• Disclose social contribution activity data

Strengthen communication

with local communities

• Conducted survey to collect opinions from communities • Establish a permanent communication channel with local communities

• Identify local community issues and needs

Participate in volunteer

services and local

communities

• Offered volunteer services centered on each business site • Implement social contribution activities connected to local

communities’ issues

3,4842013

1,2962013

114

2014

1,146 2014

Develop Flagship Social Contribution Programs

LS Dream Village

LS Dream Village is LS Group’s representative social contri-

bution program launched in 2007, in which a total of 450

university students from 14 sessions have participated as

of August 2014. They have improved educational envi-

ronment provided education for cultural and emotional

growth to students in developing countries including

Vietnam, India, and Cambodia through this program. The

LS college student volunteer corps is operated in collabo-

ration with Copion and the Korea-Vietnam Culture Center

and has been building primary schools called LS Dream

Schools near LS affiliates’ Vietnam branches. The opera-

tional rights of completed LS Dream Schools are trans-

ferred to the local People’s Committee. Following the 1st

and 2nd Dream Schools in 2013, we completed Trung An

‘A’ Primary School in Vinh Long Province near Ho Chi Minh

and Thai Hoa Primary School, with 6 to 10 classrooms,

in Hai Duong near Hanoi in 2014 as the 3rd and 4th LS

Dream Schools.

LS Dream Science Class

LSIS operates the LS Dream Science Class jointly with

LS Holdings, Child Fund, and the National Academy En-

gineering of Korea to provide primary school students

neighboring our plants with science practices and cultur-

al experiences. LS Dream Science Class is run by LS em-

ployees and college students who act as science mentors

in order to help students develop an interest in science.

In 2014, LSIS held a total of 11 Dream Sciences Classes to

support the dream of our future generations through sci-

ence educations.

▶ ❶❷ LS Dream Village Activity

▼ ❸❹ LS Dream Science Class Activity

❶

Category Place/Time Summary

1st half Dispatch Volunteers Vietnam/Jan. 2014 Overseas volunteer services for 12 days by LSIS employees

2nd half Vietnam/Aug. 2014 Overseas volunteer services for 12 days by LSIS employees

LS Dream Village Activities

❷

❹❸

Number of participants in social contribution Donations

Coexist with local communities based on voluntary social contribution




By establishing a company-wide implementation system for social contribution, we

plan to conduct activities that embody our social contribution philosophy of solidarity,

spontaneity, and sustainability. We will develop and operate our flagship social contri-

bution activities based on dialogue with local communities and active employee partic-

ipation. In the long term, we will build a unique culture of social contribution and make

it a brand.

‘Systematize company-wide social

contribution’

2015

‘Improve social contribution

implementation capacity’

2016

‘Establish social contribution

brand’

2017

Develop flagship social contribution programs

Build a system for social contribution activities

Participate in volunteer services and local communities

Strengthen communication with local communities

Promote social contribution activities at overseas sites

Develop flagship social contribution programs

Build a system for social contribution activities

Strengthen communication with local communities

KRW KRWmillionpersons persons million


Flagship Social Contribution Activities

Linked to LSIS Businesses

In September 2014, our A&D Business Group donated

KRW 17 million worth of drives, PLC and other automation

equipment for practical and research purposes to engi-

neering specialty high schools in Anyang area such as Any-

ang Technical High School and Pyongchon Technical High

School so that students at technical engineering schools

could better understand mechanisms and gain hands-on

trainings with actual equipment. The donation helped fos-

ter a practical and systematic educational environment.

Build a system for Social Contribution Activities

LSIS Social Contribution Philosophy

We pursue social contribution activities in line with those

of other affiliates within the LS Group in order to achieve

unity and synergy. Based on the LS Group’s management

philosophy, LSpartnership (LS is a faithful and reliable

business partner creating greater value together), it has

adopted the social contribution philosophy of being a

‘trustworthy partner supporting the underprivileged and

hopeful future generation.’ Based on this, we are pursuing

domestic and overseas social contribution activities that

focus on creating greater value with a sharing and col-

laborative relationship between recipients and volunteer

workers.

Social Contribution Implementation Structure

LSIS aims to move beyond simply taking part in the ac-

tivities led by our holding company, and finally operate a

new stand-alone social contribution program in the long

run that can create larger synergy. Currently, the compa-

ny-wide social contribution activities are led by the Pub-

lic Relations Team and the Support Innovation Team and

LinkerS (representative body for support staff ) from each

plant implement activities tailored to each region.

Strengthen Communication with Local Communities

Communication with local communities are currently

carried out through irregular meetings, surveys, volunteer

services, and interviews. For a more strategic approach to

social contribution, we will reorganize communication

channels that reflect the characteristics of the local com-

munities and conduct regular programs to accurately

identify their actual issues and needs. By doing so, more

practical supports will be provided to them. We will also

share their needs with our volunteer groups at each busi-

ness site to implement social contribution activities that

are meaningful to our local communities.

Volunteer Services and Participation in Local Communities

In 2014, our donations increased significantly due to con-

tributions to the Sewol Ferry accident victims and special

contributions for win-win growth. We plan to continue

making contributions to issues that concern our nation

and national development.

social Contribution

20132012

114

144

1,146

2014

Donations (Unit: KRW in millions)

in 2014

1,14620132012

45.2

41.2

47.4

2014

Social Contribution Activity Expenditure


(Unit: KRW in thousands)

in 2014

47.4

* Tabulation of participants in social contribution activities began in 2013.

2013

1,296

3,484

2014

Participants

in 2014

3,48420132012

141

102

163

2014

Activities Held

in 2014

163

Category Amount Main Activities

Development of local communities

310,029 • 1 Company 1 Barracks sponsorship• Special donations for win-win growth, etc.

Social welfare 660,400 • Donations for the underprivileged • Donations for the Sewol-ho accident

Culture and arts 119,500 • Sponsorship of national underwater photography contest • Donations to the Center for Cultural Unification Studies • Sponsorship of local sports teams, etc. • Sponsorship of Special Olympics Korea

Education and research 56,000 • Sponsorship of CEPSI (Conference of Electric Power Supply Industry) • Monetary support for Hanyang University overseas internship program

Total 1,145,929

Donations

Volunteer service for senior welfare center

(Unit: case)

Donation of service vehicles

million

persons

million

cases

KRW KRW

(Unit: persons)

Social Contribution Philosophy of LS Group

Trustworthy partner supporting the underprivileged and our hopeful future generation

Social Contribution Philosophy of LSIS

Provide sustainable support towards solving social conflict and helping the minorities based on a commitment to partnership

[Responsible parties for each plant]Main: Head of each plantSub: HR Support (Support Innovation) Team Leader/

Social contribution staff

Cheongju Plant

Cheonan Plant

Busan Plant

LinkerS*

CEOPublic

Relations Team

* LSIS’s representative body for support staff, comprised of 17 members, to establish an open corporate culture and lead social contribution activities

Partnership Initiative Sustainable

Social Contribution Execution System of LSIS

Take interest and participate in issues

related to social conflict and minorities

Conduct sincere and voluntary activities from the bottom of

the heart

Continuously participate in social

contribution activities beyond just

one-time event


Regional Activities

Cheongju

Participate in volunteer services and local communities

Anyang

Cheonan

Cheongju

Busan

Anyang

Cheonan

Category Department in charge Summary Cost Frequency Participants Remarks

Dream Science ClassPublic Relations Team

Operated Science & Vision Camp event - Once 1 Run by LS Group

Blood Donation for Love LS blood donation relay for love - Once 38 -

LinkerS Beautiful DayLinkerS

Employee item collection drive for Beautiful Store Once 50

Selling and donating items for Beautiful Store 1.5 Once 3 Employee goods donations

LinkerS regular sponsorship Scholarship for 6 child household heads 7.2 12 times 204 True Love 999

Informal volunteer workWoori Love Corps

Goods support for 70, 80th birthdays 1.8 3 times 62 Informal event funds

Informal regular sponsorship Contribution to child welfare funds 2.7 9 times 513 Informal event funds

Volunteer Day activities

Public Relations Team

Volunteer work at Love House/senior citizens welfare centers 0.8 6 times 44 True Love 999

Contribution to local

communities

Donation of service vehicles - 2 times 9Utilized donations for the

underprivileged

Provision of winter apparel to senior citizens welfare center - Once 4

Free meal delivery on Korean Thanksgiving Day - Once 3

Support for sporting events at senior citizens welfare centers - Once 2

A&D Business Group Donation of automation training equipment 17.0 Once - Division budget

Total 31.0 40 times 933


Green & Clean Day Environment & Safety Team On/off site cleaning activities - 9 times 138 -

Blood Donation for Love

Support Innovation Team

Blood donation for love - 4 times 121 -

Volunteer Day activities Volunteer day for free meals 1,7 11 times 96 True Love 999

Contribution to local

communities

Support for educational tours of the Cheonan plant for

professors and college students- 4 times 16 -

Total 1.7 28 times 371


1 Company 1 Mountain campaign

Support Innovation

Team

Clean-up of Bumo Mountain - 6 times 19 -

1 Company 1 Village sisterhood Sales of agricultural products, promotion of local B&Bs, event support 5.9 5 times 109 Individual donations

Green & Clean Day On/off site cleaning activities - 9 times 167 -

Dream Science Class Teacher for a day - 2 times 2 Run by LS Group

Dream Science Class Support site visits to Cheongju plant - 2 times 3

Blood Donation for Love Blood donation - 4 times 149 -

Informal regular sponsorshipInformal Child sponsorships - 11 times 528 Individual donations

Boramhoe (club) Support for the Choongbuk Rehabilitation Center/Oh-Am Welfare Center - 12 times 660

Volunteer Day activitiesInnovation

Implementation Team

Volunteer work at the Gomduri Sports center 0.2 7 times 71 Event budget

Volunteer Day activities Volunteer work to protect ivy plants 0.4 2 times 38 True Love 999

Volunteer Day activities Volunteer work at Yeshim House 0.9 6 times 88 True Love 999

Support for local cultural

activities Support Innovation

Team

Viewing and support for concerts, recitals and plays 7.3 10 times 162Promotion and

advertisement budget

Korean Cultural Artifact Protector Clean-up activities at Sangdangsanseong (mountain fortress) - 7 times 72 -

Total 14.7 83 times 2,068

(Unit: KRW in millions, persons)




Green & Clean Day

HR Support Team

On/off site cleaning activities - 6 times 75 -

Dream Science Class

Support for site visits to the Busan Plant - 2 times 5 Run by LS Group

Teacher for a day - 2 times 2

Support for end of session event - Once 1

Blood Donation for Love Blood donation - Once 29 -

Total - 12 times회 112

Busan(Unit: persons)


Strengthen Corporate Information Disclosure

Composition and Operation of the BOD

LSIS Board of Directors (BOD) is the supreme decision

making body comprised of 5 directors (2 standing di-

rectors and 3 non-standing directors) that also balances

the actions of the CEO and executives. Outside directors

are nominated by the `Outside Director Candidate Rec-

ommendation Committee’ and confirmed at the general

shareholders meeting, which ensures fair and transparent

selection of outside directors.

Ownership Structure

As of December 31, 2014, the number of floating shares

of LSIS is 29,325,029, 98% of total issued shares excluding

about 2% treasury shares. The largest shareholder is LS

Holdings with 46% ownership, followed by the National

Pension Service with 11.80%. Institutional investors in-

cluding the National Pension Service hold 21.36% owner-

ship, the largest portion excluding LS Holdings, followed

by foreign investors with 16.36% and minority sharehold-

ers with 14.03%. Foreign investors have paid attention to

our stable business portfolio and future growth potential,

leading to a rise in their ownership.

Shareholder Returns

LSIS provides shareholders with above market average

dividends. Dividends are an indicator of a company’s fi-

nancial health and the ability to continuously generate

profits. LSIS has maintained a dividend payout ratio of

30% and increased the figure up to 40% in 2014 for more

shareholder returns. Dividend per share and dividend

yield have also increased backed by continued growth

of net profit. Like this, we are committed to becoming a

company that grows with our shareholders by providing

dividends that are above market average.

06



In 2015, we plan to diversify communication channels with our shareholders and

investors in addition to continuous expansion of sustainability data disclosure. We will

work to increase shareholder and investor trust by establishing a system to respond to

international socially responsible investment (SRI) evaluations in 2016. Based on this, we

will improve our stability with the goal of entering the global SRI indices.

‘Expand shareholder/

investor communication’

2015

‘Establish response system

to Global SRI* evaluations’

2016

‘Enter the Global SRI indices’

2017

Strengthen corporate information disclosure

Enhance risk management

Accelerate performance of new businesses

Advance corporate governance

Increase corporate value through sustainability management

Accelerate performance of overseas businesses

Strengthen corporate information disclosure

Advance corporate governance

Increase corporate value through sustainability management

Shareholders/Investors Satisfaction

Dividend ratio Credit rating

(Korea Investors Service, Korea Ratings s as of October 2014)

40.60% AA-2013

29.12%

2014

Treasury Stock Foreign Investors Individuals

Domestic Institutions LS Holdings

2%

16%

14%

46%

22%

Increase shareholder and investor value with management integrity and transparent disclosure



Strengthen corporate

information disclosure

• Disclosed and updated corporate governance data • Activate performance disclosure for shareholders and investors Treasury Team

Advance corporate

governance

• Shareholder-investor communication activities

- Quarterly performance presentations

- Participation in the Company Day events held by major securities firms

- Meeting with the management for sharing information on new businesses

- Overseas IR

• Expand communications with shareholders and investors

- Surveys

- Collect feedbacks related to sustainability management

• Established the Outside Director Candidate Nomination Committee • Regularly monitoring corporate governance standards and

implement improvements

• Strengthened the operation of internal audit system • Expand activities to reflect stakeholder feedbacks in management

Increase corporate value

through sustainability

management

• Built a system for disclosing sustainability data • Monitor SRI institutions’ demands/standards and respond rapidly Corporate

Planning Dept.

Category Ownership (common shares)

Shares Ratio

LS Holdings 13,800,000 46.00%

Treasury Stock 674,971 2.25%

Institution-

al Investors

National Pension

Service (NPS)

3,540,917 11.80%

KB Asset

Management &

Others

2,867,676 9.56%

Foreign Investors 4,907,092 16.36%

Individuals 4,209,394 14.03%

Total 30,000,000 100.00%

* Dividend payout ratio: Dividend/net profit during the term. Dividends include mid-term and stock dividends. Calculated based on listed companies with year end accounting that pay dividends. (468 companies out of 669 in 2011, 448 out of 691 in 2012, 440 out of 691 in 2013)

* Dividend Yield: Dividend/closing stock price at the end of year

Category 2011 2012 2013 2014

LSIS KRX average LSIS KRX average LSIS KRX average LSIS KRX average

Total dividends

(KRW in millions)

17,595 - 29,325 - 32,257 - 38,123 -

Dividends per share

(KRW)

600 - 1,000 - 1,100 - 1,300 -

Dividend payout ratio 29.91% 24.56% 29.07% 17.15% 29.12% 21.09% 40.60% -

Dividend yield 0.90% 1.54% 1.49% 1.33% 1.67% 1.14% 2.17% -

Classification Name Position Experience Start of Term

Standing

Director

(2 Persons)

Ja-Kyun

Koo

Chairman of

the BOD

Chairman & CEO

2014.3.21

Jai-Hoon

Han

President & COO • Former CEO of LS Metal 2015.3.20

Non-

standing

Director

(3 Persons)

Hyun-Gyo

Chung

Outside Director

(Audit Committee)

• Professor, Electrical &

Computer Engineering,

Seoul National University

2014.3.21

Sang-Woo

Han

Outside Director

(Audit Committee)

• Outside Director at Korea

Development Financing

Corporation

2013.3.22

Byung-

Kook Lee

Outside Director

(Audit Committee)

• CEO, e-Chon Tax

Accounting Corp

2014.3.21

* Socially Responsible Investment


Advance Corporate Governance

Shareholder and Investor Communication

Providing timely and transparent disclosure and commu-

nicating with investors and shareholders are essential for

building solid trust in the aspect of sustainability. LSIS is

always proactive in communicating with them.

1. We hold regular quarterly meetings to share our performanc-

es with shareholders and investors.

2. We actively participate in securities firms’ Company Day

events to interact with an even wider range of investors.

3. Through our management meetings to present new business-

es, we communicate not only our new business ventures but

our growth potential to strengthen trust and attract potential

investors.

4. We are strengthening interactions with foreign investors and

shareholders through conducting overseas IR activities.

Outside Director Candidate Recommendation

Committee

Selecting outside directors is transparent and fair through

the Outside Director Candidate Recommendation Com-

mittee under the BOD. Our outside directors with plentiful

expertise and experience not only supervise and monitor

the management but also support rational and fair deci-

sion making by providing professional insight on our busi-

ness and management.

Operation of the Audit System

Internal audits at LSIS are performed by the Audit Com-

mittee. The Audit Committee is made up of 3 outside di-

rectors, ensuring fairness and independence. The Audit

Committee examines financial statements at least once

a quarter and has the authority to investigate overall ac-

counting operations and status of assets when necessary.

In addition, we have the Internal Verification Part to oper-

ate internal accounting system, through which the Audit

Committee receives reports and evaluates the internal

auditing to ensure reliable recording and disclosure of

our financial statements. Apart from these measures, the

Audit Department under the CEO frequently monitors vi-

olations of regulations, accounting errors and omissions.

Furthermore, we select an independent auditor to review

our quarterly balance sheets in compliance with the Act

on External Audit of Stock Companies. The independent

auditor performs annual and mid-term audits to evaluate

risks surrounding the reliability of internal controls and

balance sheets. The independent auditor is appointed by

the Audit Committee and we ensure independence and

transparency with regard to the selection and activities of

the independent auditor.

Increase Corporate Value through Sustainability Management

Administration and Responsibilities for

Sustainability Management

LSIS is continuously expanding communication channels

with our stakeholders in order to better incorporate

feedback into our management decisions. By doing so,

we will actively communicate with them on our financial

performances, new business plans, new products, global

expansion as well as activities and data related to our

sustainability management. In addition, we will continue

to expand the scope of our disclosure and rapidly respond

to their information inquires. As part of this, we will publish

sustainability report every year to systematically manage

our economic, social and environmental performance.

Respond to Socially Responsible Investment

Following the adoption of the Bill for Partial Amendment

of the National Pension Act that requires the Pension

to consider social responsibility of its investments and

disclose related information, we can expect investors

and investment institutions to demand non-financial

data and implementation of sustainability management

practices. In addition to disclosing financial data, LSIS

also participates in the Carbon Disclosure Project (CDP)

in order to meet requests for social and environmental

data disclosure. In the future, we will actively respond to

stakeholders’ requests for non-financial data disclosure

through diverse channels including the sustainability

report.

Activity Summary

Participate in the domestic IR

conference

Participate in major securities firms’ Corporate

Day events

Promote overseas investor

meetings

Conduct about 60 meetings a year locally in

Europe, Asia, etc.

One-on-one meetings Host about 100 visits to the company a year

Management meetings Hold meetings with analysts and institutional

investors once or twice a year

Earnings release 4 times a year (2 days in every quarter)

Management Innovation Activities

Our innovation framework is comprised of innovation

activities to achieve our vision and mid to long term

strategy, and the mindset to transform our people and

organization. The ‘3P Evolution’ management innovation

activities we have been pursuing since 2012 is linked to

our company-wide mid to long term strategy. It requires

clarifying the direction of innovation activities by each

function and role, as well as enhancing the mindset of all

members toward innovation.

Implementation Structure for Management Innovation

Our company-wide management innovation activities

are spearheaded by the Management Support Depart-

ment under the COO. The implementation at each plant

is managed by the Innovation Promotion Team under the

Plant Support Group, which helps conduct innovation

management systematically and consistently.

Future Plans

In 2015, LSIS will align our employees’ thoughts and en-

ergies through value-focused management. LSIS will also

reorganize the innovation system more clearly. As the

2020 vision target has become more clear, we plan to

enhance execution capacity of innovation activities and

improve the quality of existing activities such as Big Y and

Suggestion Activities. For the Big Y program, we will clarify

the selection guide for projects and strengthen the oper-

ation manual. We will also support KPI-focused activities

by upgrading the innovation implementation system.

‘3P evolution’

Completing LSIS evolution by gaining the DNA for growth through

innovation in 3Ps: Product, Process, People

Big Y/ BPM/Factory Optimization/ Suggestion Activities/ Skill/ Six Sigma/ Innovation Fair

Corporate Culture/ Top Commitment

Opportunity Efficiency

R&D Innovation

Sales Innovation

Quality Innovation

Procurement Innovation

Production Innovation

Management Innovation

New Value Creation

Global Attacker

3x2Q015

SMART CSR 30

PI 3XAchievement

BusinessEnabler

Smart Work, World Class People

LSIS Spirit(Mind Set)

Support Innovation

Product Process People3P

DNA for Growth

Goal

Enabler

Basics

R&D Innovation l Secure the next generation growth engine in the early stage and upgrade technology to maximize R&D performances and product competitiveness

Sales Innovation l Solidify the status of flagship businesses and to pursue sustainable growth of new businesses and overseas markets

Quality Innovation l Promote flawless quality innovation to secure stable business growth and world class product quality

Procurement Innovation l Promote cost competitiveness innovation to strengthen profitability

Production Innovation l Upgrade QCD and production system to maximize profitability of existing businesses and to accelerate profitability of new businesses

Management Innovation l Ensure high operational efficiency and advance work processes

Support Innovation l Secure core competencies within the organization and instill a mindset of innovation in all employees

Innovation Framewok DNA for Growth

Management Innovation System

CEO COOPlant

Support Group

Management Support Division

Innovation Culture Part

Innovation Execution Team

Cheonan PartCheongju 2 PartCheongju 1 Part

shareholders/investors satisfaction

management innovation


Major Activities and Performances

Big Y Activities

We select strategic tasks, named Big Y to link our business

strategy, and those tasks are undertaken by nominated

excellent employees every year, contributing to increasing

operating performances. For better engagement in

the Big Y tasks, a task force team is being operated in

Quick Innovation & Creation (QIC) Room. In addition, we

systematically manage the tasks with our unique project

tracking system, i-Space. Furthermore, the Innovation

Specialist Committee works to improve the quality of task

outcomes.

Factory Optimization Activities

To ensure quality and cost competitiveness, LSIS has

commissioned external experts to improve site efficiency.

We have been implementing site-centric efficiency

measures in phases focused on mindset revolution,

visual site management, efficiency per unit, and overall

efficiency in accordance with a fixed process map.

These activities were undertaken at both our domestic

factories and overseas subsidiaries, and a total of 96 sites

received consultations in 2014. In addition, overseas

subsidiaries pursue maximizing synergy by sharing best

practices with our domestic plants, as well as focusing

on independent site efficiency activities. Domestic plants

that have completed the six phases of the process map will

maintain and develop site efficiency through operating

independent meetings from 2015, while overseas

subsidiaries that are on the 4th phases will continue to

receive consultation to upgrade the efficiency level up to

domestic factories.

Suggestion Activities

The Suggestion Activities was prepared to share ideas

and knowledge among employees and eliminate waste

and inefficiencies in their routine works. This program has

been conducting in the company level, in connection with

the CoPQ activities since 2008. Outstanding Suggestion

are rewarded through deliberations.

Innovative Performance Sharing Meeting The Innovative Performance Sharing Meeting is held to

commend contributions to innovation activities and to

share the contents and results. Innovation activities of

each business group and division are led by their heads.

Meanwhile, company-wide innovation activities are con-

ducted by outstanding Big Y tasks selected through the

evaluation of the Innovation Specialist Committee, and

the performances are shared through company-wide

Innovative Performance Sharing Meeting hosted by the

CEO at the end of each year.

* Big Y: Strategic tasks aiming at securing core competencies and strength-

ening competitiveness to be promoted in the short to mid-term to

evolve into the world best company

Category 2012 2013 2014

Outstanding projects (case) 5 5 4

Rewards (KRW in millions) 11 11 13

* Performances in 2013 sharply increased due to the change of calculation method.

Category 2012 2013* 2014

No. of Suggestion 11,257 9,999 9,554

Participation rate 53% 64% 80%

Performances 41 604 372

Rewards 45 56 57

R&D Direction

As a total solution provider in power and automation

industry, our R&D Group focuses on activating existing

businesses, securing growth engines for the green

and next-generation businesses, and maximizing R&D

performance and efficiency. In particular, we are working

to secure core competencies to gain 1st mover advantage

in the smart grid market and focusing R&D capacity to

build a foundation for next generation businesses such as

HVDC and parts for future automobiles. We operate R&D

centers in 3 domestic locations and overseas (Shanghai).

The Power Testing & Technology Institute is engaged in

improving technological competitiveness.

R&D Investment

In order to maintain our competitive advantage and

prepare for the future, LSIS has been expanding R&D

investment every year. We invest around 6% of sales to

R&D and focus on developing next-generation products,

products and technologies for new businesses and core

technologies to lead us into the future.

Strengthening R&D Capacity

LSIS conducts open recruitment in order to attract and

develop outstanding R&D talent in a timely manner, and

Lab Tours of major universities in the power and electricity

field for early recruitment of talent. For recruited talent, we

provide R&D mentoring and on the job training to help

new hires adjust and gain a sense of membership early on

and help them grow into key talent through systematic

training. In order to build a performance-based culture

and motivate R&D staff, we reward researchers with

excellent accomplishments in fields such as research

papers, patents, open culture, Partnership & Presentation,

product development and technology research.

Opening of the Anyang R&D Campus

LSIS opened a new R&D center in Anyang in January 2015

to secure state-of-the-art infrastructure for R&D capacity

enhancement. The R&D center was designed with the

concept of communication, fun, and creativity, in which

our capabilities in smart grid were fully introduced. This

cutting-edge building provides a creative environment

for LSIS researchers to pursue R&D.

Category 2012 2013 2014

Total R&D expenditure 100,546 102,276 109,755

R&D expenditure/sales 6.1% 5.8% 6.0%


Efficiency Improvement Status Board

Efficiency improvement activities at sites

❶ R&D Campus in Anyang

❷ Electric Technology R&D Center in Cheongju

❸ Power Testing & Technology Institute

❹ Automation R&D Center in Cheonan

❺ R&D Center in Shanghai

❷

❹ ❺

❶ ❸

management innovation

technology management/intellectual Property

(Unit: items, KRW in millions)


cantly increasing our overseas IP portfolio in connection

with our global business strategy. Moreover, through col-

laborative analysis of IPs between our R&D and IP units,

we not only build an effective R&D strategy but also se-

cure differentiated technology and prevent IP disputes.

In addition, we continuously seek ways to exercise our IP

rights by evaluating IPs and obtaining infringement infor-

mation. For win-win growth, we transfer, free of charge, IPs

to SMEs as a part of the diverse methods of IP utilization.

Various education programs are offered to develop IP ex-

perts and the LS-IP Forum which brings together the IP

departments from the different LS affiliates is running to

enhance the competitiveness in IP.

IP Portfolio

As LSIS’s technology reaches global standards and our

products gain market recognition, we have been encoun-

tering more cases of IP disputes and product counterfeit-

ing. As such, we are focusing our capacities on strategic

IP activities to protect our world-class products and tech-

nologies as well as new products that will act as our future

growth engines. To this end, we have been striving to se-

cure IP rights for technologies ranging from basic to ap-

plied levels, and create a competitive IP portfolio encom-

passing products and technologies. This strategy enabled

us to prevent an IP dispute with a global competitor by

signing a cross-license and contributed to our becoming

one of top 100 global innovators which were named on

the basis of IP index by Thomson Reuters for 4 consecu-

tive years. As of December 2014, we hold 3,531 and 3,250

IPs (patents/designs) in Korea and foreign countries, re-

spectively. Recently, our overseas patents have been in-

creasing steadily as we strengthen our R&D-related and

foreign-market-oriented patent activities.

technology management/intellectual Property

Open Innovation

LSIS leads open innovation through open R&D with

domestic and foreign research centers. We operate a

joint research center with the Korea Electro-technology

Research Institute to secure world-class technology and

work cooperatively with leading overseas institutes in

India and Israel to obtain technology necessary for R&D

efforts. In addition, we established the SVO (Silicon Valley

Office) to monitor global technology and market trends

in energy, electrical equipment, and materials, as well as

actively collaborate with local universities and venture

companies through the SVO.

Key R&D Accomplishments

Completed the K-EMS Project

The Korean Energy Management System (EMS) that LSIS

has been working to develop in conjunction with various

research institutes over the past decade was completed

and began successful operation at the Naju Korea Power

Exchange in December 2014. This means that Korea’s na-

tional grid, which was dependent on foreign technology,

can be operated and managed through a consolidated

Korean system and we have the capacity to export this

technology.

Built a Company-wide Technological Infrastructure

We built a company-wide infrastructure to strengthen

technological and business competitiveness and an R&D

system to enhance product reliability. In addition, with

the establishment of control tower to foster the leader-

ship in telecommunication, software, and model-driven

design, we have promoted a PDCA approach to enhance

our capabilities. We also secured quality and cost compet-

itiveness by reinforcing research on materials and formed

the Functional Safety Group and EMC (Electro Magnetic

Compatibility) Group to increase product reliability.

R&D for Early Adoption of New Growth Engines

We are working to expand the EMS (Energy Management

System) technology to the power distribution field for

developing and exporting DMS (Distribution Manage-

ment System) technology. In the field of EV solution, we

are focusing energy on developing a 48V system which is

key to micro/mild HEV (Hybrid Electric Vehicle) and have

won large-scale contracts. We have also supplied a large

scale EES to Samsung SDI, which is in operation, and won

a contract to provide frequency regulation equipment to

KEPCO.

Intellectual Property (IP) Strategy

LSIS is creating visible and invisible profits from IPs

by building a strong IP portfolio, preventing disputes

through preceding patent search/analysis, and proac-

tively utilizing the rights. We are strategically building

our IP portfolio through identifying IPs that have major

business impacts based on equal or superior technology

compared to our competitors, securing patents in coun-

tries we export to, developing standard-essential patents

and monitoring infringements. In particular, we are signifi-

Category Granted Pending Total

Domestic Patent 1,950 1,350 3,300

Design 220 11 231

Total 2,170 1,361 3,531

Overseas Patent 1,252 1,746 2,998

Design 238 14 252

Total 1,490 1,760 3,250

* As of December 2014

(Unit: case)Rights Ownership

Patent Application (Unit: case)

Domestic

Overseas

2012

2012

2011

2011

459

568

404

431

479

411

451

584

2013

2013

2014

2014

in 2014

451

584

Named Thomson Reuters’ Top 100 Global Innovators for 4 Consecutive Years

LSIS has been recognized for its IP capacity and corporate innovation efforts by a

renowned international data provider, Thomson Reuters, in its annual Top 100 Global

Innovators list for 4 consecutive years. The Top 100 Global Innovators are selected

based on an index comprised of patent registration success rate over the past 5 years,

influence of inventions, global accessibility, and number of IP applications. LSIS displayed

excellence in this index compared to global leading enterprises. We will continue to hold

IP as a main indicator of technological competitiveness and innovation and grow our IP

portfolio across all business groups.

• Developing patents• Building patent portfolio

Securing valid patents

Supporting R&D/Business

Utilizing patents

Enhancing technology/

market competitiveness

Protecting technology/

product

Creating profit

• Searching/analyzing patented technology• Patent litigation/claim/licensing

• Monitoring patent infringement• Enforcing patents

Preventing patent disputes

in 2014

cases

cases


Operation of Ethical Management HotlinesLSIS operates various communication channels all the

time of the year to receive and process reports on em-

ployee corruption and unfair business practices leading

to damage to the suppliers, employees, and customers.

Reports can be submitted via phone, mail, e-mail or the

cyber reporting system so that we may eradicate in-

fringements. Reports related to product quality, services

or product enquires are handled by a separate Customer

Service Center.

Self-reporting ProgramTo eliminate unethical behaviors between employees or

stakeholders (customers, suppliers, shareholders, etc.) and

build a transparent and sound corporate culture, LSIS is

running a system for employees to voluntarily report their

unethical practices such as bribery and entertainment. In

addition, we hold special sessions to promote self-report-

ing by guaranteeing anonymity and providing immunity

for past infringements. Such sessions were held in 2007,

2010 and 2014.

Response Procedure to InfringementBased on Code of Ethics and Conduct, LSIS carries out

thorough investigations on unethical behaviors and takes

disciplinary measures through the Disciplinary Commit-

tee. The degree of punishment is decided through delib-

eration and resolution of the Committee.

Operation System

Cyber-reporting (Shinmungo)Since April 2005, LSIS has been operating the Cyber Shin-

mungo, an online reporting system that allows reports of

employees’ corruption or unfair actions towards stake-

holders to be made at any time. There is no restriction on

who can access the system and the identity of the report-

er is strictly protected according to our whistle-blower

protection policy.

Audit Report Follow-up SystemTo monitor the implementation of internal audit results

by each unit and department, we have been operating

the Follow-up System since June 2014, which helps en-

hance employees’ implementation capacity and prevent

reoccurrence of violations.

Strengthen Implementation Capacity for Ethical Management

Pledge of Ethical ManagementEmployee at LSIS pledges the practice of ethical manage-

ment every other year in order to maintain a mindset for

ethical management and renew written promises due

to new hires and personnel changes. Since 2013, all em-

ployees, including subsidiaries, have been subject to the

pledge. We have achieved 100% participation excluding

long-term overseas dispatch and employees on long-

term leave.

Ethical Management Satisfaction SurveyLSIS conducts a survey on the satisfaction level of partners

(suppliers and distributors) and employees. The survey is

administered annually to the partners and biannually to

our employees. We use the results to monitor changes

in satisfaction and the ethics index and also collect feed-

back to develop directions for our ethical management

activities and identify action items. The satisfaction level

of suppliers (out of a possible 5 points) was 4.19 in 2014,

showing a steady increase since 2012, while that of dis-

tributors have shown similar levels during the survey pe-

riod from 2012 through 2014. Biennial evaluation index

by employees in 2014 achieved a slight increase since the

first survey in 2012.

4.13

3.853.70

4.19 4.19

3.84 3.803.83

2012 2013 2014

Suppliers distributors Employees

(Unit: points)Ethical Management Satisfaction Survey

19

13

4

22 2

18

4

23

2012 2013 2014

Cyber reporting (Shinmungo) Phone

Mail Other

Reports and Resolutions by Channel

Reports and Resolutions by Type

ethical management

Goal and Strategy for Ethical Management

We aim to grow into a leading global company that fulfills

our responsibility for customers, suppliers, shareholders,

and the society by conducting transparent management

on the basis of the principles of fairness, honesty, and

faithfulness.

Ethical Management System The Ethics Committee comprised of the HR Committee

members is the supreme decision-making body for our

ethical management. We are operating the Ethics Com-

mittee Secretariat to undertake regular ethical manage-

ment practices and the Audit Department serves as the

secretariat.

Code of Ethics and ConductLSIS has developed the Code of Ethics and Conduct to

provide standards for employees’ ethical behavior and

decision-making and has applied this to all companies

and affiliates. For overseas affiliates, these standards are

applied in consideration of local laws. In 2015, we plan to

begin regular inspections on the implementation of the

Code of Ethics and Conduct.

Operation Programs and Policies

Whistle-blower Protection PolicyLSIS does not disclose the personal information of whis-

tle-blowers or report content without prior consent in any

manner. If the whistle-blower receives any disadvantage

due to a miscarriage of this policy, the company takes all

responsibility to repair or compensate for damages.

Strategy Strategic Action Items

Establish and operate ethical management infrastructure

• Code of Ethics and Conduct • Operation program and policies - Whistle-blower protection - Operation of hotlines - Self-reporting system - Response procedure to infringement of

ethical management

• Operation system - Cyber reporting (Shinmungo) - Audit Report Follow-up System

Strengthen implementation capacity for ethical management

• Pledge to practice ethical management• Survey on ethical management

• Education on ethical management practice for employees

• Education on ethical management for suppliers

• Delivery of official letters for cooperation to suppliers and distributors

Ethical Management Strategy

The identity of the whistle-blower and the content of the

report is treated as confidential and the reporting system is

operated under a safe security system

Even if a person report corruption or unlawful acts he or

she is involved in, the extenuating circumstances will be

taken into consideration for rational resolution of the issue.

The identity of the whistle-blower and stakeholders are

strictly protected and the content of the report will be fairly

investigated for rational resolution.

If damages arise to thewhistle-blower as a result of

information leaks, reparations or corresponding rewards will

be taken.

02

03

04

[ Role of the Ethics Committee Secretariat ]

• Develop and disseminate programs and

training needed for voluntary compliance

with ethics standards

• Institutionalize and operate regulations and

processes necessary to report unethical

cases or potential risks

• Provide authoritative interpretation

for employees implementing ethical

management in everyday work practices

and raise important issues to the Ethics

Committee

CEO

Business Group

R&D Group

Support Group

Ethics Committee

Audit Department (Ethics Committee Secretariat )

COO

01

Clean and transparent management/Fair competition/Social stewardship

Excellence LSIS

FairHonest

Faithful

Ethical Management

Society

• Enhance company value and image

• Secure stable investment foundation

Customers

Suppliers

• Confidence in company and products

• Secure a stable foundation for growth

Shareholders Unfair trade Job improvement/suggestion

Corrupt/unlawful acts Unfair operations

Claim Other

* Report types are selected by the reporters and may differ from investigation results.

5

7

32 1 2

43

2

9

42

2

5

3

3

7

5

2012 2013 2014

25 27

17

General Principles Summary

Chapter 1. Responsibilities and Duties toward Customers

Faithful information disclosure/response to customers/protect customer’ rights

Chapter 2. Fair Competition Fair competition/respect for related laws and business customs

Chapter 3. Fair Transactions Fair selection of suppliers/fair trade and evaluation/ a clean trade culture/support for suppliers

Chapter 4. Basic Ethics of Officers and Employees

Maintain employees’ dignity/honest and fair reporting/protect company assets/avoid conflict of interest with the company/prevent sexual harassment in the workplace

Chapter 5. Responsibility toward Officers and Employees

Cultivation of talents/fair treatment/health and safety/respect individuals’ ideas

Chapter 6. Responsibility toward the Nation and Society

Rational business operations/benefits of shareholders/environmental protection/contribution to national and social development

Code of Ethics

(Unit: case)

(Unit: case)


Risk Management System

Our investments and projects are becoming larger

backed by the expansion of our business domain and tar-

get markets. To meet this change and proactively respond

to risk factors, we introduced the company-wide integrat-

ed management system in 2012. During normal opera-

tions when company-wide risks are within the risk limit,

risk management departments hold the working-level

meetings and departments responsible for risks conduct

examinations and develops response to individual risks.

During emergency operations when company-wide risk

exceeds the given limit, the CFO, as the head of the Emer-

gency Response Committee, organizes units to respond

to core risks and a company-wide response plan is deter-

mined by the Management Committee. And the results of

the responses are reported to the management.

Risk Management Process

Risks identified through the risk management process

are quantified and managed within the limit through the

risk evaluation process. When the risks exceed the limit,

the Emergency Response Committee is organized for

company-wide response and monitoring. In 2015, we will

improve our risk management process to achieve flawless

risk management.

Internal Controls of Financial Reporting

To efficiently control all processes related to the calculation

of our financial statements, we built an internal control sys-

tem based on the COSO* Framework in 2005 and began

operation in 2006. The internal accounting manager re-

ports the operation status to the BOD and the Audit Com-

mittee, and the Audit Committee reports the evaluation

results to the BOD.

Risk Management Categories

LSIS defines external environment, strategic, operation-

al, financial, legal and reputational risks that may impact

management goal achievement, and continuously im-

proves these definitions in order to implement systematic

and preventative risk management.

Risk Type Risk Management Summary

External Environment Risk

Minimize impacts on business performance and sustainability caused by changes in the external environment • Currency crisis, financial crisis, fiscal crisis, natural disasters, country risk, etc.

Strategic Risk Minimize risk caused by troubles in carrying out strategies • Development and investment in new businesses, M&A, business portfolio, business plans, etc.

Operational Risk Minimize troubles in achieving business goals and operational efficiency caused by products, operational processes and systems, employees, etc. • Product development, purchasing and procurement, bidding risk, quality, IT, environment and safety, subsidiary management,

personnel, information security, etc.

Financial Risk Minimize asset loss or impacts on profitability caused by changes in external factors • Raw materials, credit risk, foreign exchange risk, liquidity risk, damage to assets, accounting corruption, tax risk, etc.

Legal Risk Minimize direct and indirect losses caused by non-compliance with domestic and foreign laws and regulations • Contract/litigation/trade risk, fair trade, sub-contracting, IP rights, unlawful acts, etc.

Reputational Risk Minimize direct and indirect losses caused by damage on the corporate image from negative media exposure, rumors, etc. • Damage on brand image, external IR, communication, etc.

Internal

accounting

system

Statement of work

Statement of

control

Company-wide level

Work level

Account balance test

Capital SRM controls

Ad hoc disclosure controls

Internal verification

system

* COSO: Committee of Sponsoring Organizations of the Treadway Commission

Identification Assessment Response Monitoring Follow-up

Official Letters for Cooperation to the

Suppliers and distributors

During the Korean Thanksgiving and New Year holidays,

an official letter from the CEO is sent to suppliers and dis-

tributors to gain cooperation in forbidding our employ-

ees from receiving gifts, entertainment, goods and other

items. Our employees are notified of this and encouraged

to report infringements to help eradicate unethical con-

ducts and take part in the LS Group Management Philos-

ophy ‘LSpartnership.’

Training on Ethical Management Practice

Our employee training on ethical management and com-

pliance is centered on new and experienced hire entry

training and since 2013, it has been carried out at the LS

Group level to enhance ethics and compliance. In particu-

lar, in 2014, the GVT (Greater Value Together) program was

implemented at the LS Group level to accelerate com-

pliance and changes in organizational culture. As part of

this, online training on compliance for all employees was

conducted. In 2015, we plan to introduce training specific

to each rank that will help enhance employee awareness

of the ethical management and compliance and build our

capacity to respond to ethical dilemmas.

Ethical Management Training for the Suppliers

In early 2014, we implemented training on ethical man-

agement for the suppliers that provided an introduction

to the concept of ethical management, definitions of in-

fringements and methods to handle misconduct. We will

make these regular training sessions in 2015 in order to

spread ethical practices among our partners, share the

LSpartnership philosophy, and build consensus on the

topic.

Compliance

Declaration on Compliance Management

Ethics and compliance are both core principles for all LSIS

practices. Following the LS Group’s declaration to achieve

the management philosophy of LSpartnership by address-

ing unfair and unlawful practices strictly in order to be-

come a company trusted by the nation and fulfill our social

responsibility, we held a ceremony to practice compliance

management at our yearly kick-off meeting in 2014.

Appointment of the Compliance Officer

In accordance with the amended commercial law, the LSIS

Board of Directors (BOD) approved the compliance control

standards in December 2012 and appointed the compli-

ance officer. The Compliance Officer reports directly to the

BOD and is an adjunct position held by the head of the Le-

gal Affairs Department. The Compliance Officer organizes

the unit responsible for compliance and reports compliance

activities to the BOD annually. The main compliance sup-

port actions consist of categorizing potential legal risks that

may arise during business operations, creating a checklist to

help prevent and manage risks and providing support for

on-the-ground self-assessments using the checklist.

Self-inspection Activities

The compliance unit provides a checklist that helps em-

ployees conduct assessments of their legal risk control. In

2013, the checklist was developed based on categorization

of legal risks and in 2014, it was amended to reflect changes

in commercial law. We are promoting improvement activi-

ties based on the results of self-assessments.

Compliance Training

LS Group conducts group-wide compliance education

through both on and offline training. Our compliance unit

not only participates in developing content for the Group’s

training program but also independently conducts train-

ings on fair trade and subcontracting led by the Legal Af-

fairs Department for sales, procurement, research and other

business units. It also provides monitoring and support for

trainings conducted by each business division to maximize

effectiveness.

Legal Risk Assessment

Legal Risk Management

• Voluntary management by employees• Management by the Compliance Officer and support for

employees’ voluntary management

Constant Compliance

ethical management

• Check the possible illegal acts in consideration of the impact and frequency of legal risks⇢Evaluations based on categorization of risks

integrated risk management

76

42

135

LS Group collective training

LSIS collective training

Online training

2012

2013

897

2,363

2014

(Unit: persons)

Completion of Ethical and Compliance Management Trainings

Normal Operations Emergency Operations

COO COO

Management Committee

Risk Control Council

Steering Committee, Management

Committee

Secretary, Finance Office/Legal Affairs Dept.

Planning Procure-

mentFinance Legal

Core Risk #1

Main: Relevant Division HeadSub: Relevant Department Head

Core Risk #2

Main: Relevant Group HeadSub: Relevant Division Head

Core Risk #3

Main: Relevant Group HeadSub: Relevant Division Head

Emergency Response Com-

mittee, Committee Chairman, CFO, COO


sustainability management data_Financial

Operating Performances

Item 41st Session (as of 2014.12.31) 40th Session (as of 2013.12.31) 39th Session (as of 2012.12.31)

Assets

Current Assets 1,402,955 1,237,406 1,156,968

Non-current Assets 891,400 863,875 863,356

Total Assets 2,294,355 2,101,280 2,020,324

Liabilities

Current Liabilities 737,437 521,551 604,173

Non-Current Liabilities 563,458 652,775 578,611

Total Liabilities 1,300,895 1,174,326 1,182,785

Capital

Shareholder’s Equity 992,937 926,212 834,303

Issued Capital 150,000 150,000 150,000

Capital Surplus 935 935 935

Other Capital Items ▲25,542 ▲25,542 ▲25,542

Other Comprehensive Income/Loss Accumulated Amount 22 ▲1,164 ▲1,786

Retained Earnings 867,521 801,982 710,697

Non-controlling interest 524 743 3,236

Total Capital 993,461 926,954 837,539

Total Liabilities and Capital 2,294,355 2,101,280 2,020,324


APPENDIXSustainability Management Data 79

- Financial 79

- Environmental 80

- Social and Other 81

GRI G4 (Core) Index 84

UN Global Compact COP 87

Independent Assurance Report 88

Credits 90

Government Subsidies for LSIS Co., Ltd (Non-consolidated)

Category 2014 2013 2012

Tangible Assets Machinery equipment 239 341 443

Tool equipment - 61 183

Office equipment 34 138 229

Intangible Assets Development fees 2,584 2,777 3,357


Summarized Income Statement

Summarized Financial Position

Item 41st Session (as of 2014.12.31) 40th Session (as of 2013.12.31) 39th Session (as of 2012.12.31)

Sales 2,293,984 2,351,887 2,232,430

Gross Margin 421,713 432,090 405,926

Operation Income 157,570 174,925 154,164

Net Income Before Taxes 129,099 145,987 134,235

Net Income 105,146 113,991 97,263


* Subsidiaries subject to consolidated reporting (reports produced only when the stock-listed company issues annual, quarterly, semi-annual reports)

* LSIS (Wuxi) Co., Ltd., LSIS (Dalian) Co., Ltd., LSIS(ME) FZE, LS Mecapion Co., Ltd., LS Mecapion Automation Technology (Wuxi) Co., Ltd., LSIS Europe B.V., LS Sauter Co., Ltd., Metal Co., Ltd., LS Hukai Electric (Hubei) Co., Ltd., LSIS Japan Co., Ltd., LSIS USA Inc.


sustainability management data_environmental sustainability management data_social and Other

1) Includes metals and waste paper 2) Intensity : Emissions/Production Value 3) Unable to calculate

Environmental and Safety Employees

Category Total Cheongju Plant Cheonan Plant Busan Plant

Item Unit 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014

Environmental and Safety Investment

Eco-friendly product

development

KRW in

millions

5,066.0 6,231.7 4,025.10 1,099.0 4,871.7 2,237.1 1,350.0 1,360.0 1,788.0 2,617.0 - -

Process improvement 66.8 1,974.1 180.3 45.4 63.0 101.9 6.2 9.1 21.4 15.2 1,902.0 57

Environmental


investment

658.9 448.5 351.3 587 276 189.8 61.9 12.5 91.5 10 160 70

Environmental


investment

126 96.4 114.5 96.7 66.1 84.1 23.7 10.4 15.4 5.5 20 15

Green Procurement

Purchase of eco-friendly

items

KRW in

millions

162 216.3 206.2 97 100.5 113.8 33 25.2 23.5 32.1 90.5 69

Environment

Dust emissions kg 1,402.8 1,147.3 1,060.6 889 755.4 785.5 186.8 66.9 35.1 327 325 240

Water consumption k㎥ 199 209 230 100 95 100 82 80 83 17 34 47

Wastewater discharge ㎥ 1,192 949 875 18 14 18 1,174 935 857 - - -

Waste1)

discharge

Generalton

4,300.6 4,237.7 4,278.30 3,322.5 3,174.1 3,375.4 528.1 619.6 548.9 450 444 354

Designated 76 90.3 80.8 42.1 38 31.9 2.9 3.3 4.2 31 49 44.7

Waste discharge % 76 75.2 78.5 82.1 80.9 81.6 68.5 67 65.1 77.4 77.6 88.8

GHG

emissions

(by

source)

Scope 1

ton

174,302.1 266,289.6 201,620.3 172,688.7 264,591.9 199,912.1 898.2 975.9 937.2 715.2 721.8 771

Scope 2 24,443.5 24,747.6 25,110.7 14,522.7 14,685.3 15,172.7 7,613.3 7,774.3 7,594.9 2,307.5 2,288.0 2,343.1

Subtotal 198,745.6 291,037.2 226,731.0 187,211.4 279,277.2 215,084.8 8,511.5 8,750.2 8,532.1 3,022.7 3,009.8 3,114.1

GHG intensity2) ton/million

KRW 0.22 0.29 0.24 0.17 0.24 0.18 0.02 0.02 0.01 0.03 0.03 0.04

Energy

Electricity

consumption

MWh 51,870.0 52,604.8 52,370.0 31,148.0 31,496.6 31,522.0 16,261.0 16,674.4 16,228.0 4,461.0 4,433.8 4,620.0

toe 11,930.1 12,099.1 12,045.1 7,164.0 7,244.2 7,250.1 3,740.0 3,835.1 3,732.4 1,026.0 1,019.8 1,062.6

Electricity

consumption

k㎥ 2,133.1 2,054.0 2,079.0 1,428.5 1,329.9 1,343.0 398.4 411.7 402 306.2 312.4 334

toe 2,224.8 2,142.3 2,168.4 1,489.9 1,387.1 1,400.7 415.5 429.4 419.3 319.3 325.8 348.4

Safety

Industrial accident

rate3)%

0.06 0 0 0.33 0 0 1.03 0 0

Industrial accident rate h 63,624 64,655 73,520 41,924 41,206 43,084 17,934 18,609 24,876 3,766 4,840 5,560

Cumulative training

participants

persons 29,260 30,453 30,783 19,291 19,329 20,166 8,264 8,496 7,991 1,705 2,628 2,626

Raw Materials

Steel

kg

20,456,233 20,407,957 18,934,796 16,167,762 16,086,518 15,323,048 - - - 4,288,471 4,321,439 3,611,748

Nonferrous metals 14,585,733 12,296,147 6,376,415 13,458,951 11,037,263 5,317,721 276,956 316,868 386,975 849,826 942,016 671,719

Resins 1,490,079 4,846,096 6,884,440 1,485,822 3,945,724 4,047,340 4,257 900,372 2,837,100 - - -

Indicator Category Unit 2012 2013 2014 Remarks

Total Employees Executives

persons

21 21 20

Permanent staff 3,192 3,313 3,395

Contracted staff

(Full-time)

286 255 240

Total 3,499 3,589 3,655

Personnel by region Anyang

persons

1,075 1,129 1,163

Cheongju 1,549 1,571 1,624

Cheonan 564 596 567

Busan 162 173 187

Other 149 120 114 Regional and overseas offices

Total 3,499 3,589 3,655

Personnel by age

(excluding executives and contracted staff )

20’s

persons

444 474 478

30’s 1,223 1,240 1,220

40’s 1,093 1,107 1,143

Over 50’s 432 492 554

Total 3,192 3,313 3,395

New hires (permanent staff ) persons 257 268 254

Retirement rate (permanent staff ) % 3.0 3.0 3.4

Female employee total persons 467 455 457 Including contracted staffs

Female employee ratio % 13.3 12.7 12.5

Female managerspersons

24 26 29 Above supervisor

Employees with disabilities 45 46 44

Ratio of employees with disabilities % 1.4 1.4 1.3

Foreign employees persons 27 28 20

Education and training expenditure per person KRW in

thousands

1,055 1,088 1,337

Education and training time per person PD 10 10 11 1PD = Off the job training 8h, Cyber 1M

Welfare expenditure per person KRW in millions 12.0 12.7 13.2

Employees utilizing childbirth leavepersons

24 13 16

Employees utilizing parenting leave 11 21 14 Staff returning from parenting leave

Rate of return (after parenting leave) % 82 95 100

* We operate a retirement pension program to ensure stable disbursement of retirement funds. As of 2014, 3,601 employees are enrolled in the Defined Benefit scheme and 80 are enrolled in the Defined Contribution retirement pension scheme.

* All employees are compensated in accordance with national minimum wage laws and there is no differentiation in entry salaries for male and female employees.

* As domestic operations in LSIS consist of treatment and assembly, there are no NOx or SOx emissions.


sustainability management data_social and Other

Social Contribution Activities Memberships

Social Contribution Activities

Indicators Category Unit 2012 2013 2014

Donations KRW in

millions

144 114 1,146

Social contribution expenditures 41.2 45.2 47.4

Social contribution activity

participants

Tabulation of participantspersons

Not calculated 1,296 3,484

Social contribution activity hours Participants x Average activity hours (5 hrs.) hours Not calculated 6,480 17,420

Win-win Growth Status

Win-win Growth Status

Indicators Category Unit 2012 2013 2014 Remarks

LSIS Ethical Management Satisfaction Index points 4.13 4.19 4.19 Survey of partner companies

Win-win Growth Agreement signing Agreements signed cases 214 185 416

Funding support for the suppliers Funds raised KRW in

billions

13.5 15.8 20.2

Funds disbursed 9.7 14.8 17.3

Suppliers supported firms 43 66 70

Training support for the suppliers persons 317 668 1,005

Quality management support for the suppliers cases - 257 737

Technology support for the suppliers firms - - 9 Right to use patents, free of charge

Commissioning of development projects Suppliers supported cases 32 40 54

amount KRW in billions 1.9 2.1 2.9

Partner company ACE CLUBfirms

19 20 29

ACE CLUB Innovation capacity support Suppliers supported 14 20 29 Special Task Force on Innovation

Supported personnel persons 40 74 143

Communication with the suppliers Benefit sharing meetings firms 421 433 584 Companies in attendance

LSIS Partner Exchange

Meetings Meetings

4 4 4 Meetings held

CPO Talk Concert - 4 4 Meetings held

Domestic Overseas

Federation of Korean Industries, KERI, Korea Fire Safety Association, Korea Chamber of Commerce,

Korea Customs Association, KIPA, Korea Electrical Contractors Association,

Korea Atomic Industrial Forum, Korea Electric Engineers Association, ODVA,

Korea PROFIBUS Association, Korea Association of ESCO, Korea Information and

Communication Contractors Association, KRSEA

DLMS UA(Device Language Message Specification), IEEE PES(Institute of

Electrical and Electronics Engineers), CIRED, LONMARK International,

UN Global Compact

Violations

Category 2012 2013 2014 Remarks

Environmental violations - - -

Legal action due to unfair competition and anti-trust violations (collusion, etc.) - - 2 Unlawful group action (collusion, etc.)

Violations regarding customer health and safety risks of products - - -

Violations regarding information and labeling of products and services - - -

Products that have been banned or caused disputes - - -

Marketing and communication violations - - -

Violations of client information protection and client data - - -

Violations regarding the supply of products and services - - -

Employee discrimination violations - - -

Violations of local residents’ rights - - -

* LSIS domestic production plants are located in industrial complexes and as of 2014, there were no claims regarding local communities or the environment.

Awards

Category Date Award Host/awarder Area Recognized

Company 2014.3. Grand Prize, 2014 Great Workplace Awards (3 years running) Hankyung Magazine Corporate culture (LSIS)

2014.6. 2014 Korea’s Top 100 Happy Enterprises Grand Prize Donga Daily Great Workplace category (LSIS)

2014.6. Korea’s Best Enterprise (Power and electrics segment) Korea CEO Association Management Excellence (LSIS)

2014.6. Korea Trust Awards Grand Prize KORAS Manufacturing segment (LSIS)

2014.11. Top 100 Global Innovators Thomson Reuters Excellence in innovation (LSIS)

Individual 2014.3. 2014 Korea Global Leader Maekyung Global future technology category

(Vice president Ja-gyun Koo)

2014.3. 2014 Creative Management for National Prestige JoongAng Media Network Management Excellence (Vice president Ja-gyun Koo)

2014.5. Award of Merit, Invention day Korea Invention Promotion Association/Ministry of Trade,

Industry, and Energy (MOTIE, Korea Intellectual Property

Office)

Industry Gold Tower (Vice president Ja-gyun Koo)

2014.6. Chungbuk Quality Competitive Exhibition Korea Standards Association/MOTIE Minister’s Award (Manager Hae-moon Chung)

2014.8. Award of Merit for Advancing Electrical Industry Culture Korea Electrical Manufacturers Association/MOTIE President’s Award (Executive director Yong-sang Park)

2014.10. Award of Merit for Contribution to the Smart Grid Industry Korea Smart Grid Institution/MOTIE Minister’s Award (Director Sangho Ahn)

2014.11. National Quality Awards Korea Standards Association/MOTIE President’s Award (Team Leader Kyung-hee Koo)


Gri G4 (Core) index

● Reported ◐ Partially reported ○ Not reported N/A Not applicable ● Reported ◐ Partially reported ○ Not reported N/A Not applicable

SPECIFIC STANDARD DISCLOSURES

Aspect Indicator Description Status Page Assurance Remark

Disclosures on Management Approach

G4-DMA Report why the Aspect is material Report how the organization manages the material Aspect or its impactsReport the evaluation of the management approach

● 34, 40, 46, 54, 60, 66

88~89

Economic

Economic Performance G4-EC1 Direct economic value generated and distributed ● 13, 79 88~89

G4-EC2 Financial implications and other risks and opportunities for the organization’s activities due to Climate Change ● 58~59 88~89

G4-EC3 Coverage of the Organization’s defined benefit plan obligations ● 13, 81 88~89

G4-EC4 Financial assistance received from government ● 79 88~89

Market Presence G4-EC5 Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation ● 50, 81 88~89

G4-EC6 Proportion of senior management hired from the local community at significant locations of operation ● - 88~89 All senior management (Directors) at

domestic plants

Indirect Economic Impacts

G4-EC7 Development and impact of infrastructure investments and services supported ● 13, 65, 82 88~89

G4-EC8 Significant indirect economic impacts, including the extent of impacts ● 13, 17, 22~25, 42~45, 60~65,

81~82

88~89

Procurement Practices G4-EC9 Proportion of spending on local suppliers at significant locations of operation ● 13, 43, 45 88~89

Environmental

Materials G4-EN1 Materials used by weight or volume ● 80 88~89

G4-EN2 Percentage of materials used that are recycled input materials ● - 88~89 Recycled raw materials not used

Energy G4-EN3 Energy consumption within the organization ● 58, 80 88~89

G4-EN4 Energy consumption outside of the organization ○ 88~89

G4-EN5 Energy intensity ● 80 88~89

G4-EN6 Reduction of energy consumption ● 58, 80 88~89

G4-EN7 Reductions in energy requirements of products and services ● 22~25 88~89

Water G4-EN8 Total water withdrawal by source ● 80 88~89

G4-EN9 Water sources significantly affected by withdrawal of water ● 59, 80 88~89

G4-EN10 Percentage and total volume of water recycled and reused ◐ 59 88~89

Biodiversity G4-EN11 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

N/A - 88~89

Located in industrial parks

G4-EN12 Significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas

N/A - 88~89

G4-EN13 Habitats protected or restored N/A - 88~89

G4-EN14 Total number of IUCN red list species and national conservation list species with habitats in areasafected by operaions, by level of extinction risk

N/A - 88~89

Emissions G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) ● 58, 80 88~89

G4-EN16 Energy indirect greenhouse gas(GHG) emissions (scope 2) ● 58, 80 88~89

G4-EN17 Other indirect greenhouse gas(GHG) emissions (scope) ○ - 88~89

G4-EN18 Greenhouse gas (GHG) emissions intensity ● 80 88~89

G4-EN19 Reduction of greenhouse gas (GHG) emissions ● 58, 80 88~89

G4-EN20 Emissions of ozone-depleting substances (ODS) ● 58 88~89

G4-EN21 NOx, SOx, and other significant air emissions ● 59, 80 88~89

Effluents and Waste G4-EN22 Total water discharge by quality and destination ● 59, 80 88~89

G4-EN23 Total weight of waste by type and disposal method ● 59, 80 88~89

G4-EN24 Total number and volume of significant spills ● 59, 83 88~89

G4-EN25 Weight of trnsported, imported, exported, or treated waste deemed hazardous N/A-

88~89 Waste materials are not exported

G4-EN26 Identity, size, protected status, and biodiversity value of water bodies related habitats significantly affected by the organization’s discharge of water and runoff

N/A-

88~89 All wastewater is treated by a

specialized entity

GENERAL STANDARD DISCLOSURES

Indicator Description Status Page Assurance Remark

Strategy and Analysis

G4-1 CEO Message ● 6~9 88~89

Organizational Profile

G4-3 Name of the organization ● 12 88~89

G4-4 Primary brands, products, and services ● 18-23 88~89

G4-5 Location of the organization’s headquarters ● 12, 16 88~89

G4-6 Number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report

● 16~17 88~89

G4-7 Nature of ownership and legal form ● 67 88~89

G4-8 Target markets (including geographic breakdown, sectors served, and types of customers and beneficiaries) ● 16~17 88~89

G4-9 Scale of the organization ● 12~13 88~89

G4-10 Total number of employees by employment contract, region, and gender ● 81 88~89

G4-11 Percentage of total employees covered by collective bargaining agreements ● 50 88~89

G4-12 Organization’s supply chain ● 40~45, 82 88~89

G4-13 Significant changes during the reporting period regarding the organization’s size, structure, ownership, or its supply chain

● 15~17, 42~45, 67

88~89

G4-14 Organization’s precautionary approach or principle ● 28~33, 77 88~89

G4-15 External principles or initiatives that the company complies with ● 87 88~89

G4-16 Memberships of associations (such as industry associations) and national or international advocacy organizations ● 83 88~89

Identified Material Aspects and Boundaries

G4-17 Organization’s consolidated financial statements or equivalent documents ● 16, 79 88~89

G4-18 Process for defining the report content and the Aspect Boundaries ● 30~33 88~89

G4-19 Material Aspects identified in the process for defining report content ● 32~33 88~89

G4-20 Aspect Boundary within the organization ● 32~33 88~89

G4-21 Aspect Boundary outside the organization ● 32~33 88~89

G4-22 Effect of any restatements of information provided in previous reports, and the reasons for such restatements N/A - 88~89 First report

G4-23 Significant changes from previous reporting periods in the Scope and Aspect Boundaries N/A - 88~89 First report

Stakeholder Engagement G4-24 List of stakeholder groups engaged by the organization ● 30~33 88~89

G4-25 Basis for identification and selection of stakeholders with whom to engage ● 30~33 88~89

G4-26 Organization’s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group ● 30~33 88~89

G4-27 Key topics and concerns that have been raised through stakeholder engagement, and how theorganization has responded to those key topics and concerns, including through its reporting

● 30~33 88~89

Report Profile G4-28 Reporting period ● 2 88~89

G4-29 Date of most recent previous report N/A - 88~89 First report

G4-30 Reporting cycle ● 2 88~89

G4-31 Contact point for questions regarding the report or its contents ● 2 88~89

G4-32 The ‘in accordance’ option the organization has chosen ● 84~89 88~89

G4-33 Organization’s policy and current practice with regard to seeking external assurance for the report ● 88~89 88~89

Governance G4-34 Governance structure of the organization, including committees of the highest governance body ● 29, 67 88~89

Ethics and Integrity G4-56 Organization’s values, principles, standards and norms of behavior such as codes of conduct and codes of ethics

● 74 88~89


Gri G4 (Core) index

● Reported ◐ Partially reported ○ Not reported N/A Not applicable ● Reported ◐ Partially reported ○ Not reported N/A Not applicable

un Global Compact COPUN Global Compact 10 Principles Page reported LSIS Policy

Human Rights Principle 1. Businesses should support and respect the protection of internationally proclaimed human rights. • Employee Satisfaction

Management (p.50)

• LSIS Code of Ethics

• Code of Conduct for Employees

Principle 2. Businesses should ensure they are not complicit in human rights abuses.

Labor Principle 3. Businesses should uphold the freedom of association and the effective recognition of the right to

collective bargaining.

• Employee Satisfaction

Management (p.50)

• LSIS Code of Ethics


Principle 4. Businesses should uphold the elimination of all forms of forced and compulsory labor.

Principle 5. Businesses should uphold the effective abolition of child labor.

Principle 6. Businesses should uphold the elimination of discrimination in respect of employment and occupation.

Environment Principle 7. Businesses should support a precautionary approach to environmental challenges. • Environmental and Safety

Management (pp.54~59)

• LSIS Environmental policies

Principle 8. Businesses should undertake initiatives to promote greater environmental responsibility.

Principle 9. Businesses should encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption Principle 10. Businesses should work against corruption in all its forms, including extortion and bribery. • Ethical Management (pp.74~76) • LSIS Code of Ethics




Products and Services

G4-EN27 Extent of impact mitigation of environmental impacts of products and services ● 22~25 88~89

G4-EN28 Percentage of products sold and their packaging materials that are reclaimed by category ○ 88~89

Compliance G4-EN29 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

● 83 88~89

Transport G4-EN30 Significant environmental impacts of transporting products and other goodsand materials of the organization’s operations, and transporting members of the workforce

○ 88~89

Overall G4-EN31 Total environmental protection expenditures and investments by type ● 55 88~89

Supplier Environmental Assessment

G4-EN32 Percentage of new suppliers that were screened using environmental criteria ● 41 88~89

G4-EN33 significant actual and potential negative environmental impacts in the supply chain and actions taken ◐ 41, 55 88~89

Environmental Grievance Mechanisms

G4-EN34 Number of grievances about environmental impacts filed, addressed, and resolved through formal grievance mechanisms ● 83 88~89

Social

Labor Practices and Decent Work

Employment G4-LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region ● 81 88~89

G4-LA2 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations or operation

● 47~49 88~89

G4-LA3 Return to work and retention rates after parental leave, by gender ● 81 88~89

Labor/Management Relations

G4-LA4 Minimum notice periods regarding operational changes, including whether these are specified in collective agreements ● 50 88~89

Occupational Health and Safety

G4-LA5 Safety committees that help monitor and advise on occupational health and safety programs ● 56 88~89

G4-LA6 Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender

● 57, 80 88~89

G4-LA7 Workers with high incidence or high risk of diseases related to their occupation ● 56, 57 88~89

G4-LA8 Health and safety topics covered in formal agreements with trade unions ● 56, 57 88~89

Training and Education G4-LA9 Average hours of training per year per employee by employee category ● 49, 81 88~89

G4-LA10 Programs for skill management and lifelong learning that support the continued employability of employees ● 49, 81 88~89

G4-LA11 Percentage of employees receiving regular performance and career development reviews ● 49, 81 88~89

Diversity and Equal Opportunity

G4-LA12 Composition of governance bodies and breakdown of employees ● 81 88~89

Equal Remuneration for Women and Men

G4-LA13 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation ● 50, 81 88~89

Supplier Assessment for Labor Practices

G4-LA14 Percentage of new suppliers that were screened using labor practice criteria ◐ 41 88~89

G4-LA15 Significant actual and potential negative impacts for labor practices in the supply chain and actions taken ◐ 41 88~89

Labor Practices Grievance Mechanisms

G4-LA16 Number of grievances about labor practices filed, addressed, and resolved through formal grievance mechanisms ◐ 50 88~89

Human Rights

Investment G4-HR1 Total number and percentage of significant investment agreements and contracts that include human rights clauses or that underwent human rights screening

◐ 41 88~89

G4-HR2 Total hours of employee training on human rights policies or procedures concerning aspects of human rights that are relevant to operations

● 50, 76 88~89

Non-discrimination G4-HR3 Total number of incidents of discrimination and corrective actions taken ● 50, 75, 83 88~89

Freedom of Association and Collective Bargaining

G4-HR4 Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights

● 41, 50 88~89

Child Labor G4-HR5 Operations and suppliers identified as having significant risk for incidents of child labor ● 41, 50 88~89

Forced or Compulsory Labor

G4-HR6 Operations and suppliers identified as having significant risk for incidents of forced or compulsory labor ● 41, 50 88~89

Security Practices G4-HR7 Percentage of security personnel trained in the organization’s human rights policies or procedures that are relevant to operations

N/A - 88~89

Indigenous Rights G4-HR8 Total number of incidents of violations involving rights of indigenous peoples and actions taken ● 83 88~89

Assessment G4-HR9 Total number and percentage of operations that have been subject to human rights reviews or impact assessments ◐ 50 88~89

Supplier Human Rights Assessment

G4-HR10 Percentage of new suppliers that were screened using human rights criteria ◐ 41 88~89

G4-HR11 Significant actual and potential negative human rights impacts in the supply chain and actions taken ◐ 41 88~89

Human Rights Grievance Mechanisms

G4-HR12 Number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms ◐ 51, 75 88~89

Society

Local Communities G4-SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programs ● 60~65 88~89

G4-SO2 Operations with significant actual and potential negative impacts on local communities N/A - 88~89 Located in industrial parks



Anti-corruption G4-SO3 Total number and percentage of operations assessed for risks related to corruption and the significant risks identified ◐ 75 88~89

G4-SO4 Communication and training on anti-corruption policies and procedures ● 75 88~89

G4-SO5 Confirmed incidents of corruption and actions taken ● 75, 83 88~89

Public Policy G4-SO6 Total value of political contributions by country and recipient/beneficiary ● 88~89 None

Anti-competitive behavior G4-SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes ● 36, 83 88~89

Compliance G4-SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations

● 83 88~89

Supplier Assessment for Impacts on Society

G4-SO9 Percentage of new suppliers that were screened using criteria for impacts on society ◐ 41 88~89

G4-SO10 Significant actual and potential negative impacts on society in the supply chain and actions taken ◐ 41 88~89

Grievance Mechanisms for Impacts on Society

G4-SO11 Number of grievances about impacts on society filed, addressed, and resolved through formal grievance mechanisms ● 83 88~89

Product Responsibility

Customer Health and Safety

G4-PR1 Percentage of significant products and services categories for which health and safety impacts are assessed for improvement

● 35, 55~56 88~89 Safety considerations are incorporated into all product development

G4-PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning thehealth and safety impacts of products and services during their life cycle, by type of outcomes

● 83 88~89

Product and Service Labeling

G4-PR3 Type of product and service information required by the organization’s procedures for productand service information and labeling, and percentage of significant products andservices subject to such information requirements

● 83 88~89 Product information disclosure and labeling is available for all products

(in compliance with related laws)

G4-PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes

● 83 88~89

G4-PR5 Results of surveys measuring customer satisfaction ● 37 88~89

Marketing Communications

G4-PR6 Sale of banned or disputes products ● - 88~89 None

G4-PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes

● 83 88~89

Customer Privacy G4-PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data ● 83 88~89

Compliance G4-PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

● 83 88~89


independent assurance report

The Business Institute for Sustainable Development (BISD), led by the Korea Chamber of Commerce & Indus-try, was requested to serve as an independent ‘third-party assurance institute’ for the ‘2014 LSIS Sustainability Management Report’ (hereinafter ‘Report’), and submits the assurance statement as follows.

Purpose

The purpose of this assurance report is to identify any major errors or biases in the report, to conduct independent assurance procedures to determine

whether the sustainability management issues of LSIS were appropriately reported, and to accordingly present an assurance opinion.

Responsibilities and Independence

This report contains matters on LSIS’s sustainability management efforts, achievements and future plans in 2014. All responsibility regarding the drafting

of the report lies with LSIS.

In conducting assurance procedures on the report and providing assurance opinions to the board of directors, BISD has no management-related

interests in profits with LSIS, aside from carrying out third-party assurance, in order to maintain independence and autonomy.

Assurance Standards and Restrictions

BISD performed the assurance engagement in consideration of the three accountability principles (inclusivity, materiality and responsiveness) of

AA1000AS (2008) and the principles for defining reporting quality laid out by the Global Reporting Initiative (GRI) G4 guidelines.

Physical inspections were conducted at the Headquarters located in Anyang. The scope of the assurance was limited to only those performances stated

in this Report and excludes data from previous years and data reported online. Furthermore, GHG data that has already been verified from another

third-party organization was not subjected to the assurance engagement.

Major Assurance Procedures

For the assurance process, LSIS’s employees have engaged in interviews. Results from the interview and other relevant documents provided by LSIS

were considered for the assurance process. Major assurance procedures undertaken are as follows:

• Review of application of company’s internal sustainability report standards

• Review of report information and information collection process

• Review of materiality test, report contents related to the core issues and company policies

• Conducting physical inspection and interviews with employees.

Opinions

BISD performed the assurance engagement in accordance with the procedures identified above, and modified the report if and when deemed

necessary. Based on the assurance engagement, BISD is not aware of any significant errors in the report and confirmed that the report was written in

accordance with GRI G4 guidelines (core option).

The opinions of BISD produced as a result of its assurance engagement and in consideration of the AA1000APS accountability

standards are explained below.

• Inclusivity: Does LSIS adhere to the principle of stakeholder engagement in order to ensure a responsible and strategic response in advancing

sustainability management?

• LSIS is gathering major concerns and opinions from core stakeholders, including its customers, employees, partners, local communities, shareholders

and investors through stakeholder communication channels.

• BISD is not aware of any significant stakeholder groups that were omitted from the process of gathering sustainability management issues through

LSIS’s stakeholder communication channels.

• Materiality: Does LSIS include material issues that affect stakeholders in the entire spectrum of sustainability management in this Report?

• LSIS used the materiality test process to deduct major sustainability management issues and identified major issues through a separate process of

compiling opinions on expectations by stakeholder groups as part of the materiality test process.

• BISD is not aware of any significant issues that were omitted from the materiality test process.

• Responsiveness: Does LSIS respond appropriately to stakeholder issues?

• LSIS has acknowledged the impact of its business decisions on stakeholders and responded properly with coherent actions. The Report presents

related performances during the reporting period.

• BISD is not aware of any violations of the principle of responsiveness in LSIS’s response to major sustainability management issues or performances

that are described in this Report from the perspective of materiality.

Recommendations

BISD makes the following recommendations within a scope that does not affect the assurance results:

• LSIS classified 6 core stakeholders and introduced concepts for practice and typical communication channels for each stakeholder, demonstrating

LSIS’s efforts to communicate with the stakeholders. BISD recommends that LSIS build diverse communication channels for each stakeholder and

report their contents and frequency concretely. Also, BISD suggests releasing all activities and performances related to sustainable management on

the company’s webpage in order to expand information accessibility for stakeholders.

• It is remarkable that LSIS made an effort to select core issues systematically in publishing the 1st report. In addition, accumulating the opinions of

stakeholders through CSR expert dialogue is impressive. It is expected that LSIS improve transparency by clearly defining each stage of selecting

core issues and reporting the results from now on. Also, BISD recommends continuing the process of gathering stakeholder opinions through expert

dialogues or stakeholder dialogues and applying them in management activities.

• LSIS established the foundation of management activities, which balances economic, environmental and social factors in equal harmony by building

a sustainable management roadmap and introducing a sustainable management committee. BISD recommends that LSIS continuously set up

specific targets and plans for sustainable management and report its practices and performances.

• LSIS mentioned plans to improve their sustainable management index that is used to select cooperative firms. It is expected that LSIS expand

sustainable management activities according to its scope of influence by establishing practicable indices and goals for important elements in

sustainable management, such as human rights, labor and environment, and making persistent efforts at all levels of the company.

President

Tae-Jin Park

March 2015

Credits

General publication management

Chief Strategy Officer Min-Goo Choi

Corporate Planning

Dept.Hwan Jeong

Corporate Planning

Dept.Yu-Seok Hong

Corporate Planning

Dept.Young-Myoung Son

Power Distribution Business

group) Planning TeamJong-Sop Choi


group) Planning TeamJin-Hong Song

Power Grid Business

Group) Planning teamSang-Tae Park

Power Grid Business

Group) Marketing teamSo-Hyun Yoon

A&D Business

Group) Planning TeamYoung-Lae Suk

A&D Business

Group) Planning TeamJin-Bok Noh

Convergence Business

Group) Planning TeamKyoo-Kun Sun


Group) Planning TeamJi-Hoon Seo


Group) Marketing TeamYi-Young Kim


Group) Marketing TeamNa-Yeon Chung

Corporate Strategy Dept. Moon-Sig Jung

Corporate Strategy Dept. Hyeong-Cheol Gil

Quality Management Team Kyeong-Hoi Koo

Quality Management Team Sik-Il An


Group) Marketing Team

Sang-Won Hwang



Si-Yeong Yang

Power Grid Business

Group) Marketing team

Hyung-Taek Myung

Power Grid Business

Group) Marketing team

Hyun-Sik Park

A&D Business


Kee-Cheol Hong

A&D Business


Dong-Rin Han



Ki-Soo Yang



Eu-Gene Sull

Design Center Hae-Sook Kim

IT Innovation Team Dong-Ho Song

IT Innovation Team In-Kyoung Kim

Win Win Growth Team Ki-Bok Kim

Win Win Growth Team Se-Min Song

Human Resources Team Yun-Wook Cheon

Human Resources Team Kyung-Hoon Won

Human Resource & Relations

Management Team

Hyo-Seob Lim


Management Team

Bo-Pil Jeong


Management Team

Jae-Woo Kim

Innovation &

Culture Part

Ha-Na Yu

Treasury Team Byoung-Heon Choi

Treasury Team Kyung-Su Kim

Treasury Team Sung-Joon Song

Management Support Div. You-Jong Kim

Innovation & Culture Part Jeong-Mi Lee

Environment & Safety Team Sun-Kyu Park

Environment & Safety Team Gi-Hyun Ryu

Public Relations Team Young-Dal Oh

Public Relations Team Myoung-Geun Choi

Public Relations Team Jae-Myung Kim

This report was printed on environment-friendly paper using soy ink.

Date of Publication: March, 2014 l Publisher: Ja-Kyun Koo Publishing Company: LSIS Co., Ltd l Design: IR Plus

Shareholders · Investors Satisfaction

Customer Satisfaction

Technology Management/IP

Win-win Growth

Audit Dept. Joon-Gil Kim

Audit Dept. Bo-Young Myung

Legal Affairs Dept. Tae-Yoon Sohn

Legal Affairs Dept. Ju-Hye Kim

ERM Team Ki-Soon Park

ERM Team Joon-Sik Kim

ERM Team Young-Jun Kim

Ethical Management/Integrated Risk Management

Employee Satisfaction

Environment and Safety Management

Management Innovation

Technology Strategy Dept. Jang-Cheol Seo

Technology Strategy Dept. Ju-Hyeong Lee

Corporate Profile

Social Contribution

90 2014 LSIS Sustainability Report

2014 lsis sustainability report · 2019-11-12 · employee satisfaction evaluate and compensate...

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